Swiss Re announced recently that its Magnum Go underwriting engine has been awarded the Swiss Digital Trust Label. It sounded impressive so I went to find out more about this label, through local contacts and online resources. What I found wasn’t quite as good as Swiss Re would like to think.
Magnum Go is a Swiss Re underwriting automation engine “that insurers can integrate into their sales platforms to enhance the life insurance buying experience by simplifying its application process”. And the Swiss Digital Trust Label was launched in January 2022 by the Swiss Digital Initiative, an organisation that is independent but also supported by the Swiss Government.
The idea behind the Label is to help users easily identify trustworthy digital services, and to enable providers to declare their digital responsibility in a credible manner. Nothing new there then – there have been many ‘responsible business’ labels over the years.
So why were Swiss Re quick off the mark to get Magnum Go accredited? Moses Ojeisekhoba, the chief executive of its reinsurance arm had this to say…
“We strongly believe in digital responsibility as well as recognised standards and we fully support the Swiss Digital Initiative. The financial services industry needs to further implement and promote rigorous standards of digital governance. We consider data protection, privacy and security to be key to ensure the trustworthiness of digital services for our clients.”
It's about Involvement
Actually, I think he’s spot on. Swiss Re knows that there are concerns about data ethics in insurance, and they want to support local initiatives to raise standards. It feels like Swiss Re could have been thinking along the lines of ‘we have to do this, don’t we’.
Nothing wrong with that. I support any initiative that addresses data ethics concerns in insurance and strives to raise standards for how they can be tackled. But that comes with a caveat, in that the initiative needs to be credible and reliable. So can we say that about this Label?
I don't think we can, to be honest. Or at least, only to a limited degree. There are some pretty noticeable problems with this Label. For example…
- concerns were raised during the development process that there had been insufficient inclusion of consumer and civil society representatives.
- much discussion to place around how to shape the fairness obligation and the approach chosen is far from reassuring.
- it’s a generic label and concerns were raised about how suitable it was for a sector like insurance, where the weakening of solidarity by data is more pronounced.
- questions were raised about just how much value the Label delivered over and above existing legal obligations.
In my opinion, any initiative to demonstrate trustworthy standards in business stands or falls on the extent to which consumer and civil society representatives are involved. That's because trust is something that consumers give to a firm. Trustworthiness is what a firm does to, hopefully, earn that trust (more on that difference here). If those representative are not involved in meaningful ways from the outset, then questions will always exist around the standard’s scope, depth and delivery. And this Label is no different.
Reading through the development notes, it’s clear that there was much discussion around how the fairness obligation should be worded. It ended up being ‘fair user interaction’, which is considerably inferior to ‘fairness’ per se. The latter requires the certificate holder to consider the fairness of (in Swiss Re’s case) the decisions that its automated decision software delivers. It is at this level that trust in digital underwriting needs to be considered, not at the level of user interaction.
What’s a Label for?
It's worth considering what labels like these are there to achieve. At its most fundamental, labels exist to improve competitive advantage for the holder. Consumers who recognise and value what the label certifies are then influenced. The holder’s efforts are then confirmed, specifically in this way and more broadly in terms of reputation.
You can see here the prominence being given to the Swiss Digital Trust Label in Swiss Re’s marketing of Magnum Go. Will the insurers considering buying it be influenced? Some will, but to be honest, most concerns about data ethics are coming from consumers, not insurers. Magnum Go is a B2B product, while the Label’s value would seem to be more in the B2C market.
In my opinion, the Swiss Digital Trust Label is a nice step forward. However, it will have only limited impact unless a) it gives consumer representatives more seats and say at the table, and b) moves its engagement with fairness from limited to full.
Without those changes, it will suffer the fate of several similar such labels in the past, of being diluted after a few years and largely ignored by the public.