They do and there is even a button in iam to do just that. Also exposed as api to regernate the policy based on usage.
The pain I'm dealing with is having to look at the event logs to determine which CF task failed due to permission, then add that to the CF policy.
First result in Google gift “generate IAM policies from usage”
https://docs.aws.amazon.com/IAM/latest/UserGuide/access_poli...