Big Data

Web 3.0 is built on a world of sensors, present in increasing numbers in vehicles, homes, towns and cities and even the human body (the Quantified Self), that have become generators of data, just as social media and Internet browsing did ten years ago.

By using massive amounts of data, whilst safeguarding consumers’ privacy, we can:

• Know our customers better, fostering relevant interaction with insurance customers and being better able to understand/ anticipate their expectations;
• Improve targeting of customers’ needs, in particular by adapting premiums to customers’ real lives (“pay as you drive” motor insurance products, for example);
• Streamline processes and costs, by improved risk prediction and management, leading to increased operational efficiency.

Everything we have said about Big Data overlaps with the work the FFA has carried out on the Internet of things and artificial intelligence and the ethical challenges they present.

Artificial intelligence

The constant increase in calculation capacity and the collection of increasingly large amounts of data (Internet and mobile phone use and the Internet of things) have led to significant progress in artificial intelligence: image, voice and emotion recognition, the ability to lip read, the ability to track a driver’s facial movements and to predict road traffic events, for example.

Subject to strict regulation and rigourous auditing, data quality and security requirements, the insurance market cannot but benefit from automation. The principal benefits to insurers from this disruptive technology are far-reaching:

• Optimising management costs: by simplifying and speeding up processing tasks.
• Considerable saving of time: by assisting with and subcontracting certain repetitive and time-consuming back-office tasks, so that employees can concentrate solely on tasks with high added value.
• A valuable tool:
  • Greater data calculation capacities reduce margins of error.
  • Less making good damage and more prevention by working with the Internet of things.

Autonomous vehicles

A double revolution is happening in the automotive industry:

• A revolution in how vehicles are used: there is more and more sharing of vehicles and this will very probably continue in the future;
• A technological revolution: vehicles will be increasingly electric and equipped with mechanisms for partial or full delegation of driving that could go as far as the “driverless vehicles” already trialled in many countries.

These changes raise many questions about the impact they will have on the functioning of motor insurance.

Every year insurers settle 8 million motor claims including 250,000 injury claims. At the moment, determining liability in order to establish which insurer must ultimately indemnify the victims of those accidents poses few problems (police reports, customer completed accident reports, expert reports and so on). As partial or total self driving mechanisms develop, that investigation is likely to become more complicated.

The FFA has therefore set up a working group to respond to those challenges.

Ethical challenges

The development of artificial intelligence (AI) raises many ethical questions: how does autonomous AI influence our personal integrity, autonomy, dignity, independence, equality, security, safety and freedom of choice? How can we ensure that our basic standards, values and human rights are always upheld and guaranteed?

The FFA is carrying out a number of studies in this area, focusing on the following issues:

1. Reassuring public opinion about the use of insurance customers’ data by artificial intelligence technologies and reaffirming the importance the profession attaches to a relationship of trust with customers.
2. Ensuring we are transparent about the purpose of the studies and the use made of them, both in dealings with customers and with employees.
3. Prioritising the intelligibility and transparency of studies relating to artificial intelligence.
4. Continuing the reflection undertaken with the CNIL (French data protection authority) and following/contributing to the debate about the ethics of the use of artificial intelligence.

RegTechs

In a still very dense regulatory environment, insurers continue to face many challenges:

• a large amount of fast-changing regulation;
• high regulatory costs making it difficult to invest in developing IT systems;
• strict time limits leading to responses geared to tactical rather than strategic regulatory compliance.

A new sector serving the financial sector – the RegTechs – has emerged in the last two years. These are new actors that use innovative technological solutions to provide tools for responding to the problems raised by the growing number of regulations.

The Internet of things

The Internet of things, used in a context of global trust with a high level of data protection, represents a major threefold opportunity for insurers:

• Insurance companies can move away from providing reparation (indemnities) to providing a service (prevention), such as leak detectors and smart boxes in vehicles (“pay how you drive” products).
• The customer relationship is more continuous, built up separately from the occurrence of any claims.
• In time, the Internet of things is going to overturn how evidence is provided: insurance customers will no longer have to prove anything, things will do it for them.

To contribute to the roll-out of these mechanisms, the FFA has set up a working group implementing information initiatives on the benefits and challenges of the Internet of things for risk prevention, in relation to health, home automation and independent living.

Blockchain

Created in 2008 as a means of recording Bitcoin cryptocurrency transactions, blockchain is an innovative information storage and transmission technology, comparable to a huge decentralised shared accounting ledger. This technology enables sensitive data to be exchanged transparently, ultra-securely and virtually instantaneously, using cryptographic processes, with no central controlling body.
Blockchain technology holds great promise for the insurance sector, which typically has a high volume of exchanges between insurers. With blockchain technology:

• high volume data flows can be managed fluidly within very desirable timespans,
• data can be both highly traceable and extremely confidential,
• those advantages can be enjoyed at very encouraging costs: blockchain promises potential savings of 30%, or even more in some cases.

In 2017, fourteen insurers forming the Blockchain working group of the FFA’s Digital Standing Committee trialled this technology for exchanging data on contract cancellations under the Hamon Law (loi Hamon consumer protection law). Completed in four months, this “proof-of-concept” exercise showed the relevance of this technology for BtoB exchanges requiring timestamping.

Cyber security

The increasing number of cyber attacks – hacking, data theft, denial of service attacks, identity theft – proves that no one is safe from these acts of cyber crime and that all economic sectors (both public and private) must mobilise against this new risk.

The Fédération Française de l’Assurance (French Insurance Federation, FFA) is taking action and, in a context in which French businesses are still underinsured against cyber risk, is implementing several awareness raising initiatives.
These include:

• writing guides for businesses on good practices to adopt in order to stay ahead of cyber risk and minimise its impact and on the consequences of the new data protection rules;
• a report, “Insuring Cyber Risk”, setting out a series of recommendations, published by the Cyber Risk Commission of the Club des Juristes, chaired by Bernard Spitz (the FFA President);
• preparing cyber risk prevention information kits available at cybermalveillance.gouv.fr, overseen by the public interest group Action contre la cyber-malveillance (Action against cybercrime, ACYMA) of which the FFA is a founder member.