On September 24, the IIF responded to the International Association of Insurance Supervisors' (IAIS) Draft Application Paper on achieving fair treatment for diverse customers in the insurance sector. In its response, the IIF commends the IAIS's diversity goals but offers suggestions for balancing fairness with insurers' commercial freedom and risk-based pricing.

The IIF emphasizes that risk-based pricing is fundamental to insurance, allowing insurers to price risk accurately and offer the lowest premiums to policyholders with risk factors that are reliable predictors of insurance losses. The letter also recommends that the final Application Paper explicitly limit its scope to insurers serving the retail insurance market. This distinction is crucial as wholesale business-to-business (re)insurers do not directly serve diverse customers, as defined in the Draft Application Paper.

The response notes that insurance supervisors already impose rigorous consumer protection standards on retail insurers. These include comprehensive regulations designed to safeguard consumers, ensure financial stability, and maintain public trust in the insurance system. The letter suggests that the IAIS should consider this broader context of existing regulatory and supervisory frameworks designed to protect policyholders, including diverse consumers.

Finally, the IIF advocates for a flexible, principles-based approach to fair treatment of consumers, which would allow supervisors to adapt guidelines to their local markets, recognizing that the concept of "diverse consumers" can vary significantly across different cultural, social, and economic contexts. It also highlights that expanding insurance products to serve a more diverse customer base is already a strategic priority for many retail insurers. By broadening their customer base to include underserved or overlooked demographic groups, insurers are able to diversify their risk pools, tap into new revenue streams, and drive market growth.