WEF Davos 2026: Lobbyists Demand Regulatory Change

A leading British financial services lobby group has called on financial regulators to reform market rules to unlock innovation and ensure resilience.

Unlocking the full potential of the insurance industry requires smart, harmonised regulation and co-operation, argues the LOTIS committee (Liberalisation of Trade in Services) in a joint article with, and published by, the World Economic Forum ahead of WEF’s Annual Meeting in Davos, Switzerland.

In the article, LOTIS’s Co-Chair John Cooke and Mingcong Li, the Forum’s lead for trade in services, argue that the global insurance and finance industries will be instrumental in addressing the challenges and risks that the world faces, saying that increased resilience is needed to address these challenges.

They feel that the possibilities provided by new technologies and business models developed by insurers could provide some of the solutions needed.

TheCityUK (the organisation in which LOTIS sits, which acts to support financial and professional services businesses in the UK) and the World Economic Forum recently convened a workshop on the subject in London. 

At the workshop, insurance and finance leaders shared their insights about the solutions their industries are developing to contribute to this effort. 

Achieving collective potential

Participants emphasised the need to build deeper partnerships between industry and policymakers. They argued that policy, regulation and cross-border cooperation should collectively enable innovative technologies and business models to achieve their potential.

Harnessing technology and innovation are central to improving efficiency and reducing costs, John and Mingcong argue. 

Meanwhile, as traditional property insurance grows costlier and less accessible in high-risk areas vulnerable to natural disasters, the development of parametric insurance products offers a potentially promising alternative, they say. 

This assertion is backed by Lloyds, for example. 

“Parametric solutions are among the most transformative innovations to emerge from the Lloyds Lab, our Insurtech accelerator,” says Dawn Miller, Lloyds’ Chief Commercial Officer.

“They deliver the potential for quick, transparent and helpful solutions for hard-to-model risks that extend far beyond natural catastrophes. 

“Lab firms like Parametrix and Otonomi are proving how parametric models can address IT outages and fragile supply chains, leveraging automation and algorithmic underwriting to accelerate recovery and boost efficiency,” she says.

AI in a pivotal role

AI and predictive modelling is a huge opportunity to shift from reactive to proactive strategies to predict failures, fraud, cyber threats and automate responses, John and Mingcong say.

They recognise that the adoption of AI across the financial services industry is creating new risks, and there are concerns and uncertainty around liability for errors made by AI systems. 

They add their concerns to the voice of many others with regards to how AI will make it easier for adversaries to launch complex cyber-based threats, but acknowledge how useful advanced AI solutions can be for insurers and financial organisations to defend against these attacks. 

Sara Farrup, Head of Global Markets at AXIS Capital says: “To address global challenges and rising complexity, innovation is not optional. 

“As insurers we have the tools, data and expertise to have a greater role in developing long-term solutions to the largest and fastest evolving risks we all face. 

“By strengthening data ingestion across legacy platforms, fusing AI with event-based systemic modelling and investing in our teams’ capabilities and nurturing underwriting expertise, we can deliver holistic protection on climate and cyber and support global resiliency,” she says.

John and Mingcong believe that insurance – in collaboration with the wider finance industry – is a critical enabler of growth, transition and resilience, particularly by de-risking investment.

Focusing on the right regulation

They say that while the industry stands ready to expand its expertise and impact, it must contend with a range of regulatory barriers. Some are longstanding, arising from regulation not being attuned to new types of risk. 

But other, newer, barriers threaten much-needed competition in the global provision of solutions, they say. 

This new generation of regulatory barriers can be grouped into thematic “buckets” that illustrate areas where cross-border regulatory divergence is growing, according to the authors. These are:

• Data governance and digital identity
• AI and technology requirements
• Sustainability and ESG requirements
• Emerging geoeconomic measures

To address these challenges, they are calling for governments and regulators to work alongside the insurance and finance sectors to harmonise approaches across jurisdictions and reduce unnecessary regulatory complexity.

They call for the unlocking of the full potential of the insurance industry to address long-term challenges that will require commensurate policy consistency and predictability must faster than in the past.

They think that by fostering greater international co-operation and aligning frameworks, policymakers can help create a more predictable environment that encourages innovation, investment and the effective deployment of insurance solutions on a global scale. 

And that only through these co-ordinated efforts can the industry fully leverage its capabilities to support resilient, sustainable growth.