A revealing window into insurer thinking on big data

A recent conference on ‘big data and insurance’ opened a window into the UK insurance sector’s current thinking on what is likely to be the most influential driver to the direction of insurance over the next five years. Organised by the insurer trade body, the Association of British Insurers, it highlighted these four points for me:

  1. There seems to be a tension at the heart of the sector’s view of big data, between the recognition that insurers are only allowed, for example, to collect no more customer data than is absolutely necessary, and the market view that ‘the more we know about you, the more relevant we can be to you’. This tension is behind recent incidents such as using a patient’s subject access rights to gain access to their full medical records. The UK data regulator gave one large insurer a very public ticking off about this at the conference and warned the sector not to play games like that again.
  1. The Financial Conduct Authority’s forthcoming market study on big data in general insurance will be hugely influential, and potentially, hugely challenging for the sector. The FCA’s Director of Market Intelligence, Data and Analysis was very clear in her emphasis on fairness being a central theme of their study, while also pointing to vulnerable people as another important theme. In raising questions such as “what does fair look like?” and “what does informed consent look like?”, she was in effect telling insurers to make sure that those questions are being asked within their own big data projects. I foresee the FCA’s market study pushing insurers up a very steep learning curve.
  1. If there is one function whose use of big data is most likely to cause the eyebrows of the FCA’s market study team to shoot up, it is claims. There are signs of a culture in claims that puts the rights of consumers second to the rights of insurers, with the sector’s war on fraud being particular influential. The conference’s breakout session on claims showed up weaknesses in insurers’ use of big data in individual claims decisions. There is a real need for claims departments to tighten up their data governance.
  1. The ABI’s three ‘customer commitments’ on insurers’ use of big data (launched at the conference) are nice, but unlikely to have much impact, for they commit insurers to little more than complying with existing UK legislation. What’s clever about them though is the way in which they stake out the uses to which insurers will put customer data: as wide and general as possible on products, service and business processes. Will they prove to be an open door through which is driven all sorts of practices? That’s a real risk, unless interpretation of the commitments is tightly managed, adherance to them is reported, and the whole framework subject to an independent audit.

Those are the four main ‘take-away’s I had, as an ethics person, from the conference. It also provided some interesting quotes, such as these two from the UK data regulator:

“Big data is not a game played by different rules”

and…

“Data may be the new oil; it could also be the new asbestos”

For an insurance audience, that latter quote should speak volumes and I hope that it ends up being used in many presentations to senior management.

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