Australian Securities and Investments Commission chair Joe Longo says “good regulation” is vital as technology drives financial services innovation.

In general insurance, he flags claims handling tools, citing US insurtech Lemonade, which has used machine learning models to automatically process claims in under three seconds.

“Imagine how such technology could improve claims handling times following the next hailstorm – with the appropriate safeguards, of course,” Mr Longo said.

“Our research clearly shows that good regulation – regulation that focuses less on a prescriptive approach to specific technologies and more on key principles of accountability and oversight – can support innovation.”

Last week, the commission released a report detailing how artificial intelligence and other digital advances are changing financial services such as insurance.

The report’s insurance section says innovation is becoming strategically important but there are conduct concerns for the commission.

ASIC says the key issues “are likely to be distribution in non-financial settings, fairness and explainability in underwriting and claims, and accountability where insurers, platforms and vendors all shape the customer outcome”.

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