Head of public affairs Henry Thompson introduces the first offering from ‘think’, the IFoA’s new thought-leadership series
Since January 2021, the IFoA has endeavoured to re-establish its position as a thought leader through a rich and diverse webinar programme and, more recently, an open essay competition.
This thought-leadership programme has prompted discussions on the role of actuaries in key debates – including the future of finance, climate, diversity and COVID-19 – and attracted positive feedback from members and external stakeholders alike.
The feedback also indicated that there is real appetite for thought-provoking material that showcases the depth and breadth of our members’ expertise, and how that expertise can offer solutions to the biggest challenges faced by society.
Our ‘think’ series builds on this progress in a new way. It invites authors from within and outside the profession to share fresh perspectives on relevant topics in a challenging or provocative way. It seeks contributions that shine light on under-discussed topics or challenge the status quo, stimulating dialogue and prompting us to look at knotty issues in a different way.
The views put forward may not represent the IFoA’s official stance but might instead create a forum for innovation and debate – and, hopefully, new solutions to longstanding or emerging challenges.
The first publication in the ‘think’ series has been written by independent consultant Duncan Minty: Revolutionising fairness to enable digital insurance. Here, he answers some questions about it.
What key themes do you explore?
The digital transformation of insurance is raising all sorts of questions around fairness.
My paper takes a holistic view of these questions and discusses a framework within which some form of ‘equality of fairness’ could be achieved. Such a framework is needed because of how important insurance is to society – its success has been generating expectations that insurers need to recognise.
You refer to fairness as a ‘tectonic issue’ for the industry. Why is it so significant?
The digital world is transforming the insurance landscape, which is a great thing in all sorts of ways. At the same time, though, that landscape is also shaped by society’s need for insurance outcomes to be fair. This reminded me of the Earth's tectonic plates – things that are moving but also throwing up all sorts of questions. You can address those questions much better if you look at how they are interlinked.
You talk about how the information gap between insurer and insured is changing things. Can you expand?
It’s down to a mix of big data, sophisticated analytics and power. Insurers have equipped themselves to track what they do – and why they do it – like never before. This gives them insight into not only the present but also the near future. The influence of this on risk selection and pricing will be profound, yet much of it lacks transparency. What we’re seeing are some of the outcomes of this being contested, with the sector under pressure to be more open about what is happening.
You paint a bleak picture if the industry doesn’t deal with fairness. Do you think it will tackle the issue, rather than risk political interference?
I foresee it being less of an ‘either/or’ and more of a tussle between competing interests, partly within the sector itself and partly with key audiences such as consumer groups and politicians. Flood Re and the loyalty penalty super-complaint are bellwethers of more serious issues to come.
The danger is that people only start listening to each other late on – positions could be too entrenched. My ‘think’ series paper investigates a way of avoiding this.
Read Revolutionising fairness to enable digital insurance by Duncan Minty at bit.ly/think_thought_leader
Henry Thompson Head of public affairs at the IFoA
Duncan Minty Independent consultant specialising in insurance ethics