The insurance industry should be at the “forefront and center” of the Fourth Industrial Revolution, given that it is among the most closely regulated industries that would also benefit the most from the technology-driven change now seizing the global economy, according to Finance Secretary Carlos Dominguez III.
With technological advances like financial technology or fintech, Dominguez said insurance and other financial services could “become more efficient, accessible and innovative, leading to shorter transaction time and the ability to quickly exchange data between institutions, which, in turn, would make new products possible, and hence, greater financial inclusion.”
Dominguez also called on the insurance industry to explore new products and opportunities that would help mitigate risks arising from natural calamities heightened by climate change to help communities become more resilient and improve the capacity of countries to recover from disasters.
“The insurance industry should be at the forefront and center of technological changes driving our economies. Insurance is among the most closely regulated as well as the most benefited by technological advances,” Dominguez said at the 29th East Asian Insurance Congress held Monday at the Marriot Hotel in Pasay City. “The industry ought to explore new products that will not only mitigate risks for corporations but also mitigate risks for communities vulnerable to natural calamities.”
The theme of the conference was “Managing Disruption, Driving Change,” a topic that Dominguez said he had also extensively discussed during the recently concluded 51st Annual Meeting of the Board of Governors of the Asian Development Bank (ADB).
Dominguez said coming up with insurance products that help communities mitigate disaster risks and build resilience “is one area where business opportunities and social concerns converge quite nicely.”
According to Dominguez, the insurance industry should be mindful of the changes happening in the region, where technological advances are “radically altering the terrain for our governments and our enterprises to thrive in.”
The Philippines, for one, can only sustain its status as among the fastest-growing economies in the world by making adjustments and instituting the reforms necessary to prepare it for the impact of disruptive technological change, Dominguez said.
Thus, like the rest of the region, Dominguez said the Philippines is preparing to adapt to the changing technological environment to prepare the public and private sectors for the new economic realities.
“We call this the 4th Industrial Revolution, and it is well on its way,” he said. “This Revolution demands of us serious rethinking about how we do things, how we make products and how we create wealth for our people.”
He said governments can either adapt regulations quickly or court conflict between what technologies make possible and what regulators allow.
“The countries more nimble in reinventing regulations and moving quickly into e-governance will benefit most from the long wave of technology-driven change sweeping our countries,” Dominguez said.
During the 51st ADB Annual Meeting of the Board of Governors held last week in Mandaluyong City, Dominguez said the Bank should help “future-proof” its member-countries against the sweeping impact of disruptive change by aiding them in harnessing the rapid advances in digital technologies to improve productivity and strengthen economies.
He said ADB’s Strategy 2030 is a “good beginning” in fulfilling this goal as it provides the institution with a roadmap that will not only let member-countries adjust to the new balance of power in the global economy, in which the Asia-Pacific is the center of gravity, but also help them cope with the enormous forces unleashed by new technologies.
Dominguez, who chaired the ADB Board of Governors for 2017 to 2018, said living in today’s world means coping with rapid advances in digital technologies, which have both its “upsides and downsides” as these could, for instance, dramatically improve productivity but could also eradicate jobs and introduce greater inequalities.
At the close of the ADB meeting, Dominguez turned over the chairmanship of the Board of Governors to Fiji Finance Minister Aiyaz Sayed-Khaiyum.
Rapid, disruptive change can likewise greatly enhance access to financial systems but also open doors to digital monies like virtual currencies that no government is prepared to regulate, demand skills that schools are not prepared to provide, and produce virtual constituencies our political orders are not conceived to include, Dominguez said.
“There is a need to ‘future-proof’ our economies so that technological change makes them strong rather than undermines them. Smart technologies bring great promise but also some amount of peril,” Dominguez said. “The ADB, as the region’s main concourse of development ideas, should help member countries to better harness the forces of technological change. It needs to develop the means to support member countries from falling into the wrong side of the digital divide.”
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