1
/ 10
Contents
Foreword
IAIS OPINION: International Regulation
CAPITAL
Systemic risk
Taxation
Anti-money laundering
Corporate governance & market conduct
Financial inclusion
ACLI OPINION: Diversity, equity and inclusion
Cyber
Disruptive technology
OECD OPINION: Ageing society
Climate risks
Trade
About GFIA


OPINION: OECD

AGEING SOCIETY

Finger on the pulse

As better levels of health become more vital in today’s ageing societies, the OECD has been examining insurers’ increasing use of digital tools to promote health and wellbeing

By Yoshihiro Kawai, chair of the OECD Insurance & Private Pensions Committee

With increasing lifespans in many OECD countries, improving the health and wellbeing of policyholders by reducing the risk of disease, illness and disability and mitigating their impacts is increasingly important for insurers’ underwriting performance, particularly in the context of rising medical and care costs. Fortunately, there is growing evidence that chronic diseases may be prevented through healthier lifestyles and addressing key behavioural risk factors for disease and illness, such as smoking, alcohol use, unhealthy diets and obesity, and physical inactivity.

Digital innovations and technologies are providing new tools for the detection of health and wellness-related risks and for their management and prevention. Wearable and mobile technologies with built-in sensors can detect and monitor user activities, such as steps, and physical, mental, and emotional states, such as heart rates or stress levels. Some applications provide tools for detecting disease or health risks by leveraging artificial intelligence and large datasets. Personalised guidance and information on fitness, health, nutrition and mindfulness are also being provided. Consumers have become better aware of their health and lifestyle through the use of these tools and many are taking steps to make improvements.

“Some tools aim to promote general wellness while others target specific conditions.”


Overview of digital tools to promote health and wellness in insurance


Nudges and rewards


Building on the rapidly developing digital health ecosystem, a number of insurers have launched digital tools or apps designed to improve the health and wellness of policyholders. Some of these tools aim to promote general wellness, while others target specific conditions.

These tools, usually offered as an optional add-on to insurance policies, are said to offer a win-win: better health for policyholders and reduced claims for insurers. Many tools apply lessons from behavioural economics by seeking to influence policyholder behaviour and overcome short-term barriers to change; rewards and other incentives — in some cases premium reductions — are provided to motivate or nudge policyholders to take actions — especially physical activity — to improve their health and wellness.


Policy and regulatory issues


The OECD’s Insurance and Private Pensions Committee has been examining the emergence of these digital tools and identifying relevant policy and regulatory issues, with inputs provided by regulators and the industry. While these tools may bring some value to policyholders, the growing body of literature on mobile health apps (not specific to insurer tools, one should note) points to a range of issues and challenges, such as data privacy and security, safety risks, data quality and overall effectiveness.

Policy and regulatory frameworks need to ensure adequate policyholder protection, privacy and data security, and health protection and promotion. Existing policy and regulatory frameworks may, to some extent, be sufficient to address these challenges, but some adaptations may be necessary to strengthen protections. For instance, in some countries, privacy and data protection legislation may not provide adequate protection for the sensitive health data being collected and shared. There are also relevant evolutions in related areas of regulation, for instance in terms of the health regulations that govern software as a medical device.


“While they may bring some value to policyholders, mobile health apps raise a range of issues and challenges, such as data privacy and security, safety risks, data quality and overall effectiveness.”


OECD report: sneak peak


The Committee has prepared a report, “Digital tools for health and wellness in insurance”, that will be released in late 2022. While the report remains to be finalised, I can tentatively convey some of the main observations and conclusions:

  • A wide variety of digital tools have been developed, which vary in terms of area of focus depending on the objectives of the insurer, as well as its lines of business, expertise and resources, and the local market. That said, there is a strong tendency to introduce digital tools with a prevention component.
  • The development of digital tools to promote health and wellness introduces a new dynamic into insurance, particularly where they seek to modify policyholder behaviour. However, the ability of digital tools to bring about sustained change in behaviour remains unclear.
  • Given the sensitive nature of personal health information, ensuring adequate privacy and data security is of paramount importance for ensuring consumer trust and acceptance. Insurers could play a role in promoting strong standards for the market.
  • Insurance regulatory frameworks generally do not pose a barrier to the provision of digital tools, particularly if they are aimed at risk reduction relating to the underlying insurance policy. In some countries, there have been efforts to introduce some regulatory flexibility in order to facilitate the development of digital tools for health and long-term care.
  • Health regulation, and in particular regulation of software as a medical device, is a key consideration. Such regulation imposes requirements where digital tools seek to prevent, diagnose, treat or mitigate a disease or illness, as opposed to promoting general wellness.
  • Given that the provision of health and wellness tools represents a new area for insurers, creating new sets of expectations for policyholders and possibly involving outsourcing to, or partnerships with, external providers, reputational risks need to be managed.

Yoshihiro Kawai

Chair

OECD Insurance & Private Pensions Committee

Yoshihiro Kawai

Chair

OECD Insurance & Private Pensions Committee

Awareness-raising campaigns

  • Insurers across Europe are involved in a broad range of awareness-raising campaigns. For instance, in Germany, risk-awareness campaigns are implemented jointly by state authorities, consumer protection organisations, the insurance industry, architects and other stakeholders. Their collaboration is built around a common goal: to raise awareness of the effects of climate change and natural hazards, of the benefits of loss prevention, and of best practices as regards natural catastrophe-resilient buildings. The high level of risk awareness in Germany is one of the reasons for the relatively low protection gap; indeed, the insurance penetration rate for natural perils such as storm or hail is more than 90%.

  • Most European insurance associations have initiatives to raise risk awareness, such as dedicated workshops, events and educational seminars, as well as frequent in-depth articles, themed newsletters, presentations and other publications.

  • Many French insurers have launched prevention campaigns and also support the campaigns of “Assurance Prévention”, an association founded by the French insurance association (France Assureurs). Assurance Prévention has produced numerous leaflets, infographics, quizzes, etc. to raise awareness of natural risks. Through its initiatives, it aims to develop a “culture of risk prevention” among students and teachers.

  • The Greek insurance association (HAIC) launched a digital awareness campaign — “Better to know than to think you know” — to provide consumers with useful information about private insurance and to set the record straight on some misperceptions. The campaign consists of six videos to educate the public about how private insurance works. Most of the videos emphasise the need for resilience in the face of natcat risks and the role of insurers in protecting private property. The videos are hosted on the interactive iknow-insurance.gr platform, which allows visitors to do a short quiz to test their knowledge of private insurance and then obtain additional information.

  • Insurance Sweden is currently working with its members on a common methodology for calculating carbon dioxide emissions during building repairs. The aim is to raise awareness of the impact on CO2 emissions of rebuilding after fire or water damage, and thus of the importance, from that perspective as well, of preventing such damages.

  • Insurance Sweden published a statistical report in October 2021 on how different municipalities and regions have been affected by damage caused by flooding, storm and fire.

  • Spotlighting the central role of municipalities in climate-change adaptation, Insurance Sweden ranks Swedish municipalities according to their adaptation work. The methodology is based on the European Commission’s Adaption Support Tool (2013). The ranking is released every other year, the June 2021 version is available here.

  • UNESPA, the Spanish insurance association, launched a dedicated website in October 2021 — “Naturalmente Protegidos” (Naturally protected) to explain how natcat insurance works in Spain. It focuses on 10 different risks (rain, flood, wind, drought, frost, hail, snow, earthquake, volcanic eruption and lightning) and details for each how insurance covers property, life, harvests and livestock. The website illustrates the success of the Spanish public-private natcat insurance model. It was jointly developed by private insurers (UNESPA), the Consorcio de Compensación de Seguros (CCS) government scheme and Agroseguro, Spain’s agricultural insurance system, and was launched within the framework of Estamos Seguros, UNESPA’s financial education campaign (running since 2016).

  • In collaboration with CEPYME, the Spanish confederation of SMEs, UNESPA launched in October 2020 “Prevenir para crecer” (Prevent to grow), a website with information on insurance for SMEs. The website highlights potential risks to which SMEs are exposed, including natcat-related risks, and provides advice on how to prevent them.

  • Insurance Ireland, the Irish insurance association, and a number of Irish insurers have launched consumer blogs and information repositories on their websites to share useful information with consumers about responsible and ESG investing.

Education

The European insurance industry works to increase financial literacy in relation to risk awareness, insurance protection and long-term savings:

  • The Croatian Insurance Bureau (HUO) launched a first educational project in 2009, “Financial literacy in the Republic of Croatia”, which was followed by a range of educational activities, often implemented jointly with independent insurers. One of these activities, “Safer Tomorrow”, was initiated in 2021, and aims to raise citizens’ awareness of the benefits of insurance. Within the framework of the project, HUO launched several videos and infographics, some of which specifically target young people.

  • The HUO organises a yearly competition for the best scientific paper, the best graduate thesis and the best undergraduate thesis in the field of insurance. HUO also publishes the “Croatian magazine for INSURANCE”, a scientific journal for professionals to advance good practice in the sector. Finally, some insurers in Croatia created a colouring book for children to promote financial literacy at a young age in a fun and simple way.

  • In Italy, the ANIA Academy, together with CeTIF (Research Centre on Technologies, Innovation and Finance of the Università Cattolica del Sacro Cuore), launched the second edition (2022) of the 2nd level master’s in insurance management to train professionals and enable them to respond to the challenges of the “new normal”.


  • ANIA is also collaborating with LUISS Business School to develop a major course in insurance management as part of its Executive Master in Financial Management.

  • Insurance Europe produces information for consumers as part of its “InsureWisely” financial education initiative. This includes one-pagers on different insurance topics, including how to limit the effects of natural catastrophes.


  • The French insurance association (France Assureurs) developed a series of educational booklets within the framework of EDUCFI (the French national strategy for economic, budgetary, and financial education), an initiative launched by the French Central Bank. These booklets help users to better understand how insurance works and what insurance products do and do not cover.

  • The Spanish insurance association (UNESPA) set up a financial education programme for schools, “El Riesgo y Yo” (“The Risk and I”). It involves 40 insurance undertakings and 164 volunteers and aims to give 2 500 teenage school students basic financial knowledge and insights into risk management.

Tools and solutions for consumers

Several insurers have developed tools or applications to inform consumers of extreme weather events and whether their properties are at risk from such events.

  • In 2021, the German insurance association (GDV) introduced a new system for making the risk to buildings of heavy rain damage more transparent. Buildings are placed into one of three risk categories, depending on their location.

  • The German insurance sector has also developed the “Naturgefahrencheck” (Natural hazards check) and “Hochwassercheck” (Flood check) online tools. With one click, every citizen can check the degree to which their home is at risk of flood, hail and storms. It is quick and easy to understand, it provides the information by postal code area free of charge and it does not require registration.

  • Swedish insurers developed VisAdapt, a tool designed to help homeowners to decrease the risk of weather-related events affecting their houses.

  • The Austrian association of insurers (VVO) and the Austrian government jointly developed the HORA app/website (Natural Hazard Overview and Risk Assessment Austria), which helps to determine whether there is an impending risk of flooding or other natural hazards. The website also presents up-to-date weather data on floods, including on water levels, as well as earthquakes, storms, hail, lightning and snow.

  • French insurers participate in the National Observatory for Natural Risks, a project involving three major partners: the Ministry of Ecological Transition, the CCR (Caisse Centrale de Réassurance) and the MRN (Mission Risques Naturels), an association created by the French insurance association (France Assureurs). This initiative aims to boost prevention and contribute to increased awareness of the risk of natural disasters by keeping citizens informed of their exposure to potential natural hazards.

  • The Salvage Foundation was established as an independent foundation in 1986 at the initiative of Dutch fire insurers, which are all members of the Dutch insurance association (VVN). The Salvage Foundation is unique in Europe and provides aid after fire, water, lightning, explosion or storm damage. Salvage arrives on site within an hour, undertakes damage mitigation activities, arranges shelter and provides the insurance company with the information it needs to carry out the claim settlement process without delay.

Tools and solutions for insurers

Some associations have developed tools to help insurers assess the risks and consequences of natural hazards.

  • In Germany, ZÜRS Geo (Zonierungssystem für Überschwemmungsrisiko und Einschätzung von Umweltrisiken) is an online zoning tool that allows insurers to calculate accurately different types of flood risk and offer risk-related premiums.

  • ANIA Safe, a subsidiary of Italian insurance association ANIA, created GeoSafe, a platform that uses AI-based calculations and models to help insurance companies evaluate the risks and consequences of natural hazards and disasters, such as floods, earthquakes and crop damage.

  • The French insurance association (France Assureurs) created a dedicated technical body, Mission Risques Naturels (MRN) and MRN GIS (General Information System), to assist private insurers in analysing their customers’ and prospective customers’ exposure to different natural hazards. MRN GIS also gives insurers access to public authorities’ hazard-zoning data, and data on land-use planning restrictions by risk level.

  • The French CERES tool (accessible to insurers via the CCR website) helps private insurers to benchmark their geolocalised loss records against those of the market.

  • In Spain, UNESPA published a report to help insurers navigate the recommendations and opinions issued by supervisors and international organisations on the procedures for insurers to integrate sustainability risks and factors into the different areas of their governance.

Forecasting and early warnings

  • The Dutch insurance association (VVN) publishes an annual Climate Impact Monitor (Klimaat Impact Monitor) in collaboration with Wageningen University & Research (WUR). The Climate Impact Monitor provides a compilation of extreme weather data and loss data, and other climate-related data. The VVN collaborates with the Royal Netherlands Meteorological Institute (KNMI) on issuing early warnings of extreme weather events. Combining data from the KNMI with risk and loss data from Dutch insurers allows for greater preparedness in the face of changing weather patterns, and the development of solutions to prevent damage from future extreme weather events.

  • UK insurers carry out a range of activities to support national and regional forecasting of future weather and catastrophe patterns. They use these outputs to inform their business practices, including pricing decisions and risk-based capital assessments. The UK insurance sector also uses such modelling in its dialogue with policymakers and has lobbied for robust action on climate change by the government.

  • French insurers are experimenting with a smartphone/SMS system to provide consumers with early warnings of extreme weather events.

Floods

  • The Czech insurance association (ČAP) and Intermap Technologies, with the support of reinsurer Swiss Re, created flood maps that are used to assess the likelihood of floods occurring in the Czech Republic. ČAP members use the system to evaluate risks and calculate property insurance premiums. It is also a useful free tool for consumers, as it helps them to determine whether their property is situated in a flood zone and it provides them with important information about insurance options, indicating for instance where there would be a possible premium increase. (Commercial and company use requires a contract with Intermap Technologies). The map data is updated regularly to ensure consistency with the information used by ČAP members.

  • The German insurance sector has also developed the “Naturgefahrencheck” (Natural hazards check) und “Hochwassercheck” (Flood check) online tools. With one click, every citizen can check the degree to which their home is at risk of flood, hail and storms. It is quick and easy to understand, it provides the information by postal code area free of charge and it does not require registration.

  • Swedish insurers developed VisAdapt, a tool designed to help homeowners to decrease the risk of weather-related events affecting their houses.

  • The Austrian association of insurers (VVO) and the Austrian government jointly developed the HORA app/website (Natural Hazard Overview and Risk Assessment Austria), which helps to determine whether there is an impending risk of flooding or other natural hazards. The website also presents up-to-date weather data on floods, including on water levels, as well as earthquakes, storms, hail, lightning and snow.


  • In Germany, ZÜRS Geo (Zonierungssystem für Überschwemmungsrisiko und Einschätzung von Umweltrisiken) is an online zoning tool that allows insurers to calculate accurately different types of flood risk and offer risk-related premiums.


  • ANIA Safe, a subsidiary of Italian insurance association ANIA, created GeoSafe, a platform that uses AI-based calculations and models to help insurance companies evaluate the risks and consequences of natural hazards and disasters, such as floods, earthquakes and crop damage.