Data Analytics Posts

These posts are all about the ethics of data and analytics in insurance. It's a big and influential subject, linked to many of the exciting developments now happening in insurance.

The Ethical Challenges facing Open Insurance
Open insurance may be the next big step forward for insurance, but it will struggle to succeed unless a variety of ethical issues are addressed.
Is settlement walking now part of UK insurance?
The ethical risk that settlement walking represents is very real and far greater than price walking. Insurers need to evidence their position on it.
The Ethical Risks from Data Enrichment
Data enrichment is a big thing in insurance at the moment, yet it needs to be thought of more critically. Its ethical credentials are weak, and coming under increasing challenge.
5 sources of bias in analytics that insurers must address
Insurers understand bias in data, but need to be on top of bias in analytics as well. Organising their response around these five sources will make help a lot.
Two rulings that threaten many digital strategies in insurance
Two rulings should set warning lights flashing for many a digital strategy in insurance. Insurers need to think carefully about their implications, for there are signs that others are.
The Big Ethical Challenge for Insurers in 2021
The big ethical challenge for insurers in 2021 will be to learn the lessons from events in 2020 and to apply them systematically across the firm. It will be a bigger task than many insurers think, but those who get it right will reap reputational rewards.
8 ways in which a digital strategy can build trust in an insurer
Digital strategies in insurance will be undermined if they don't build trust in the insurer. I explore why this is so, and present 8 ways in which an insurer should start looking
Data and Power pt4 – the right skills are vital to success in data ethics
A commitment to data ethics will only succeed if the people delivering this transformation of insurance have the right skills. Insurers have a long way to go on this.
Data Ethics starts with Rigorous and Critical Due Diligence
Low consumer trust will hamper insurers' digital strategies and fuel regulatory interventions. A more critical culture and more rigorous data due diligence is needed.
Data and Power pt2 – the two big threats to insurers’ digital strategies
Insurers are going to find that discrimination and access represent the two biggest challenges to their digital strategies. How insurers engage with these issues is critical
Data and Power pt1 – the starting point for insurers’ data ethics journey
The most significant ethical theme that insurers need to address over the next three years is data ethics. Yet it is complex and nuanced, so insurers need to think carefully about how to organise their response.
The final pricing report is about so much more than loyalty penalties
The UK regulator’s decision to ban ‘price walking’ in general insurance is significant. Yet that significance is wider than simply how policies are priced. I explore those signals so that insurers can start preparing now.
The lessons that claims people should learn from the exam grades debacle
The recent exam grades debacle in the UK provides insurance people with lessons on what will befall them if current trends in claims practices continue.
Why pricing data can send out all the wrong signals
Insurance people used to think of pricing as just a market thing. Now they recognise that fairness has to be factored in as well. Yet the ethics of insurance pricing has other dimensions that need to be factored in. If they're not, the current pricing review will take even longer and become even more tortuous.
The radical ways in which time is changing insurance
The need for annual or long term insurance policies is being questioned. A new temporality of insurance is emerging, with significant ethical implications.
Insurers must prepare for big changes around genetic testing
We will soon see some big changes to the way in which the use of genetic information by UK insurers is regulated. It will be a different world, and insurers need to start preparing for it now.
Are loss prevention initiatives just trojan horses for data harvesting ?
A buzz phrase in the insurance market at the moment is ‘ecospheres of prevention’. It sounds like exciting stuff, but it is also replete with questions of ethics and power.
Behavioural fairness is a serious risk to the future of insurance
An influential narrative has emerged within insurance in recent years, centred upon the notion of behavioural fairness. It's a narrative that could determine how insurance evolves over the next decade. The problem is that it's a narrative with significant flaws.
Some thoughts on ethics, insurance and the pandemic
It is in times like the present that the reputation of the insurance sector will be defined. Here are some thoughts on ethics, insurance and the current pandemic.
Telematics will be much more influential than people think
Telematics features regularly now in the business and technology media. And academic institutions are having their say too. Yet all too often, the influence that telematics is having is underestimated.
A dangerous regulatory mindset that will undermine trust in insurance
'Not our problem' is the conclusion the UK regulator has reached about personalisation, the most fundamental change happening in insurance. So why is the FCA being so myopic? And how should insurers respond?
Is signposting as ethical as the market believes?
Signposting is being set up across a variety of retail insurance markets. The aim is to help consumers find the cover they need. Yet signposting is also a symptom of a stratifying market and that comes with all sorts of ethical implications.
The ethical storm clouds hanging over insurance claims practices
The biggest ethical exposure facing insurers over the next 24 months will come from claims practices. It deserves to be one of the big financial risks that insurers typically detail in their annual report. So why are ethical storm clouds hanging over claims?
What is insurance? And why data analytics makes this matter
When does a firm become an insurer? And what is insurance? These are not nebulous questions. Data and analytics makes it hugely important that there be clarity around them.
Why discrimination is an enormous ethical challenge for insurance
Insurers are facing a challenge to how they have been managing discrimination across their business. They should treat it seriously, for it has powerful backing and could have serious repercussions.
The big ethical challenges facing insurers in 2020
2020 will be an eventful year for insurers. During the many years I’ve been tracking the ethical challenges facing insurers, never before have I seen so many issues demanding attention. Some firms will find the learning curve steep and challenging.
How positive an influence are reinsurers having on data ethics?
Reinsurers are an influential bunch. This makes their approach to data ethics important. So it's troubling then that their messaging seems to be so mixed
Why privacy solutions can come with ethical complications
Privacy enhancing analytics like homomorphic encryption seem to offer much to insurers, yet they also have wider implications that firms need to consider as part of their wider focus on data ethics.
Why insurance executives need to think like a decision architect
A challenge like data ethics needs insurance executives to be more like decision architects. This will have a deeper and longer lasting impact on a key theme of 2020.
Are privacy concerns about to undermine pricing strategies even further?
Insurers could soon find themselves having to defend their extensive processing of consumer data. This is yet another consequence of the current pricing review.
Why TCF is the wrong path for implementing data ethics
Data ethics is now a regulatory priority for the FCA. And the TCF framework is being positioned as the means for delivering it. That would be a mistake, for these five reasons
The radical new approach to tackling insurance mis-selling
Mis-selling has been a perennial problem for the insurance market. In the last couple of years, the UK regulator's approach has changed, radically. Intermediaries and representatives should prepare for a new regulatory experience.
Why EIOPA is going about its data ethics principles in the wrong way
Data ethics principles are important for a sector like insurance. What also matters is the process by how you develop them. The process shapes the outcome, for better and, probably in EIOPA's case, for worse.
Politicians are burying the loyalty penalty: so what comes next?
The political writing is on the wall for the loyalty penalty. Yet the regulator will still face some difficult challenges to getting their response right. At least they've now got some powerful friends to help them.
The Fundamental Challenges that Insurance faces from Data Analytics
What are the fundamental challenges that data and analytics pose to insurance? Here are six that I think raise profound questions for the sector.
Will there soon be compulsory ethics training for insurance algorithms?
Ethics training is compulsory in several countries' insurance markets. So what happens when decisions are increasingly being made by algorithms? Should they have compulsory training too?
Why Honesty and Purpose will change the Conduct Agenda
What is an insurer there for? It's a question that every insurer, new and old, needs to understand and address with honesty, for it drives how a business is run.
Why the FCA should not use claims complaints as a value measure
The FCA wants to use claims complaints as one of its values measures. It makes sense, until you remember the direction that claims systems are going. It is likely to have serious consequences for policyholders.
Why predictive analytics in claims is so dangerous for insurers
Claims settlements are an insurer's biggest expense. So analysing them in all sorts of clever ways is surely a good thing. Yet is it? Some of the uses to which analytics are being put in claims fail basic ethical tests, and risk confirming the public's worst fears about the sector.
Actuarialism and its influence on trust in modern insurance
Actuarialism involves only seeing your customers through the lens of data and analytics. It's now an established trend across many insurance markets, but it could also lead to some huge trust issues for the insurance sector.
Why supervisory technology will revolutionise insurance
Just as insurers are gaining new insight from all their data and analytics, so are regulators too. And the trajectory that regulators are taking could have profound implications for the market’s attitude to ethics.
Is underwriting at claim stage a reputational timebomb?
A pattern is emerging across the market that points to a new type of underwriting. And it is pretty revolutionary, as well as controversial. It is being referred to as ‘underwriting at claim stage’.
How do you feel about insurers tracking and analysing your emotions?
Insurers are using data and analytics to track and predict our emotions. Yet using it in underwriting and claims decisions raises some significant ethical issues. Here's why.
How good are your firm’s algorithms? Can you prove it?
There's a lot of excited claims being made about algorithms in insurance. Can they credible? Can they be trusted? It's time to remove the hype and focus on performance.
Data and analytics: the problem that insurers will have with identity
Data and analytics is changing insurance in all sorts of exciting ways, but it's also raising some fundamental ethical questions. The first we'll be looking at is identity
Why confusion could become a key ethics metric for insurers
The quality of policy wordings could well be coming under close scrutiny soon - scored for comprehension and audited for confusion. Time for your firm to tune in.
Could the new accountability rules spring one last surprise on UK insurers?
The pricing review could trigger a rethink by the UK regulator of an earlier doubt expressed in the new accountability regime. It's all about algorithmic trading
The underlying warning in the FCA’s report on household insurance pricing
The UK regulator's report on insurance pricing will have set alarm bells ringing at many insurers. The underlying warning in it represents a real challenge to many firms
The super complaint will put pricing practices under intense scrutiny
A super-complaint was delivered last week to the UK competition authority. It means pricing practices in the retail general insurance market will now come under intense scrutiny. I assess its origins and implications, and show how insurance firms can respond.
Answering the big questions about the principles for insurance pricing
The biggest event in 2019 in relation to ethics and insurance will be the announcement by the FCA that firms must demonstrate clear principles for insurance pricing.
Access to medical records is controversial but achievable
Should insurers be given access to digital medical records? The question has more ethical angles to it than you might first think. This post explores them.
Why smart policy wordings need to be handled with care
Many will be glad to see the end of longwinded policies. Yet be careful what you wish for. Smart policy wordings could present some uncomfortable surprises.
Where the really fundamental changes in insurance will emerge
How transformative are the changes happening in insurance at the moment? In amongst the noise of disrupting start ups, is a paradigm shift under way?
Can insurance delivered over the blockchain be labelled trustless?
Many people see blockchains as crucial to the future of insurance. They're described as trustless, yet what does that mean, and is it a realistic claim?
The new pricing principles for insurance: origins, impacts and ideas
UK insurance is adopting new pricing principles for personal business. Yet in doing so, individual insurance firms will need to address some tough questions about controversial practices.
Are actuaries ready for a new era of accountability in insurance?
Actuaries are approaching an ethical crossroads, where the opportunities of data and analytics will meet a new era of accountability in insurance. How they respond will set the scene for how trust in insurance develops over the next five years.
Dual Pricing in Insurance – the beginning of the end?
The next 12 months will see the pricing practices of UK insurers put under close regulatory scrutiny. Their focus will be on dual pricing in the household market. So what should insurance firms be on the lookout for, and how might they prepare for the spotlight about to be turned on them?
7 reasons why claims optimisation needs to be seen as a failure
The most ‘ethically questionable’ practice to have emerged out of the innovation currently transforming insurance is ‘claims optimisation’. As key pieces of accountability and data legislation go live in 2018, what should claims directors weigh up in relation to this controversial practice?
Personalisation – could it take insurance into a digital winter?
Insurance is being transformed not by data or analytics, but by personalisation. Yet personalisation has some inherent flaws, which I examine in this post. What we could end up with is a cauldron of disruption, fuelled not by innovation, but mistrust.
The Ethical Problems at the root of the Mohammed and John Quotations
Two UK insurers have been accused of charging people more for motor cover if their name was Mohammed, than if their name was John. It has been vehemently denied by people across the sector. Yet the story has attracted widespread attention. And it’s unlikely to be a one off either. Here's why.
Gender bias in artificial intelligence: a vital trust issue for Insurers
Researchers have found clear evidence of gender bias in artificial intelligence. The growing use of AI by insurers means that the sector needs to address this quickly, in order to maintain public trust and avoid regulatory scrutiny.
Ethical storm ahead – insuring people with experience of mental illness
The sector’s approach to insuring people with mental illness is under scrutiny. So what are the ethical dimensions that insurers need to grasp? And looking forward, what market developments could make this situation even more ethically charged?
Why insurers need to prepare for some tough scrutiny of their underwriting
Insurers have been using big data analytics to explore new underwriting techniques for several years now. Yet events are unfolding that point to the possibility of this coming under some harsh scrutiny by regulators and consumer groups.
Should insurers share claims data to make their systems more accurate?
Insurers want to share claims data in order to improve the accuracy of their new analytics systems. It sounds quite straightforward, but lift the lid and it’s a proposition with several ethical implications.
Why ethics training has to be a big priority for insurance people
The importance of ethics training for insurance people is going to soar over the next three years. And when I say soar, that’s no exaggeration. Insurance people are going to be weighed up and tested like never before. The main driver for this will surprise you.
Ethics in Insurance: the challenges ahead in 2018
2018 looks like it will be an eventful time for ethics in insurance. Here are 11 areas where insurers will find the big ethical challenges.
Could this Digital Tool transform the Ethics of Insurance?
Artificial intelligence could be used in ways that could transform the ethics of insurance. One development in particular could have widespread implications
Privacy in Insurance: 3 sources of ethical risk for insurers
Privacy in insurance has been getting lots of attention recently, largely because of the EU’s GDPR. Yet there’s a danger that this surge in legal and compliance activity will overly focus minds on the policy and process detail, while leaving scant time to think through the big privacy issues that the insurance buying public is concerned about.
The Great Accountability Challenge facing Insurance Leaders
Technology is reshaping the business models of insurers. Yet this reshaping presents a new accountability challenge that needs to be addressed.
6 Reasons why Marketing is a Significant Harm Function
As insurance becomes digitised, so marketers are making decisions with the potential for ever widening impacts. Does this make them a significant harm function?
A Framework for Trust and Growth in a Digital Market
Insurers need to grasp the ethical issues underlying trust and growth in a digital market. This framework provides them with a template for doing so.
Four challenges that insurers face when using artificial intelligence in claims
The use of artificial intelligence in claims represents a 'significant opportunity’ for the sector, said Ageas. It also introduces some slippery slopes, four of which I explore here.
Smart contracts in insurance: clever but dangerous
Smart contracts in insurance open up all sorts of opportunities. And they sound clever and exciting, but they also raise questions. How will they influence trust in insurance?
What risks does big data pose for professionalism in insurance?
Big data is starting to transform insurance. It could also transform professionalism in insurance, in ways that present some pretty new risks. So what should professional bodies around the world look out for?
Does this spell the end for insurance claims?
Aviva have a new system called Ask it Never, designed to eliminate the need to ask customers any questions when giving them a quote. The list of implications is impressive!
Could this be the Achilles Heel of Insurance Fraud?
Telling claimants that you’re collecting data to combat fraud, and then using it to optimise claims settlements, could turn out to be the Achilles Heel of insurance fraud.
Is this the most controversial claims innovation of all?
With claims optimisation, are insurers abandoning all remaining hope of sustaining trust in a digitised market? It is innovative, but hardly ethical.
Accountability in an era of algorithm driven insurance – rock or hard place?
There a question mark forming over the capacity of board members of insurance firms to perform their oversight duties effectively.[...]
Could algorithms make insurance firms ungovernable?
It sounds a bit scary, but could big data result in the oversight provided by board members of an insurance[...]
Addressing the key question for 21st century insurance head on
Europe’s leading experts on computing, privacy and data protection (CPDP) will be brought together at a conference this week in[...]
Which rules should ‘insurtech’ disruptors break?
There’s a lot of attention being given at the moment to the startup firms that are entering the insurance market[...]
Analytics is the new frontier for insurance – exciting but dangerous
When investment returns look uncertain and market conditions are challenging, executives often listen that bit more keenly to new ideas[...]
The atomisation of insurance
The insurance sector is on the cusp of fundamental change. And at the heart of that change is the sector’s[...]
Insurance marketing and the dangers of manufactured vulnerability
Marketing is adopting the tools of big data and some of the practices that are emerging would, if used by[...]
Privacy – how to challenge four common myths
There are a growing number of roundtables and conferences about insurance and big data at the moment. And at some[...]
Why that magic element of big data could be fatal for insurers
Earlier this year, I wrote a post called ‘Data, Equality and Insurance’, about a small survey that I’d undertaken into[...]
A radical change in insurance regulation is underway
The Chartered Insurance Institute has recently published a paper by me, entitled ‘The Digital Panopticon and the New Power of[...]
Vulnerable consumers and price optimisation: a reputation wrecker?
Vulnerable consumers have been in the spotlight recently, following some research papers issued by the insurance regulator. And many insurance[...]
Data, Equality and Insurance: a small survey
The insurance market is entering a new phase, in which underwriting and claims practices are being transformed through access to[...]
Tensions evident in ABI’s view on customer data
UK insurers are recognising that their use of customer data is becoming a key reputational issue for the sector, but[...]
Why the pensions sector must address issues around big data – pt4
The pensions sector has a lot on its cards at the moment. Ethics may not appear to be a priority,[...]
Social Sorting: could it be the stuff of nightmares for insurance firms?
Privacy is an ethical issue that the UK insurance sector often thinks about, usually in terms of it being something[...]
Why data is the key regulatory challenge in financial services
Data is the key challenge facing the regulation of UK financial services. So said a representative of the Prudential Regulatory[...]
The 3 most popular issues on the Ethics and Insurance blog
This is the 200th post on the ethics and insurance blog, so if you don’t mind, I’ll take a quick[...]
Price optimisation pt2 – key losses that insurers face
Around half of UK motor insurance is said to be priced according to some form of price optimisation. If so,[...]
Price optimisation – approach with care!
Questions have already been raised about the ethics of dual pricing. This started out as the practice of offering new[...]
11 principles for building ethics into your use of big data
In last week’s post, I explained why insurance firms need to integrate privacy protection into the big data dimension to[...]
The ethics of big data – a critical window of opportunity for insurance firms
Insurance has always relied on data. And with the mainstreaming now of revolutionary techniques for how data can be acquired,[...]
Please don’t talk about data misuse! …and other ambiguous terms.
The language we use when talking about an ethical situation is important. Words can sometimes convey more than their simple[...]
The NHS treatment records – what can insurers learn from this event?
News that the UK’s National Health Service (NHS) released 47 million patients records to an actuarial society has caused a[...]
Long term insurance: the spectre that is polarisation – pt3
As data flows in and policies become personalised, how will insurers avoid genetic information creating a polarisation of long term insurance markets?
Long term insurance: genetics and the drift towards personalisation – pt2
Add genetics and personalisation to trends in medical devices, big data and predictive analytics and all sorts of ethical implications could arise
Could long term insurance be heading into a perfect storm – pt1
There are trends in the long term insurance market that, if seen through to their conclusion, could have significant implications, both ethical and social.
Insurance, data and a politician – a cautionary tale about privacy
How one insurance organisation got into hot water when it released claimant data that it thought had been suitably anonymised.
Ethics and Underwriting – Part 4 – will client information be the next great challenge?
The way in which client information is obtained, and then used and protected, raises some of the most fundamental ethical questions for insurers
One vital rule for insurers to remember about predictive analytics
Predictive analytics offers many benefits for insurers, but there is one vital rule that must never be forgotten, especially with regard to potentially fraudulent claims
The new uncertainties that anonymised data will introduce
How insurers use anonymised data has clear ethical implications, as well as risks that could trap the unwary and lead markets astray.
The ethical minefield that is anonymised data
The way in which insurers handle anonymised data can raise all sorts of ethical questions, with implications for policyholders, underwriters and regulators
Do personalised premiums mean the end of risk pooling?
"With insurance no longer a matter of risk pooling, policyholders pay a fairer premium". Is this really the case, and if so, what are the implications for insurance?
The fundamentals of an ethical information economy: thoughts about the future
Jaron Lanier's book raises some innovative questions that insurers should absorb when thinking about the long term implications of big data
Privacy and Consent: some examples for a proactive insurer
Insurers need to challenge engrained thinking about consent to reflect the new regulatory and reputational landscape. Here are some examples for a proactive insurer to get started with.
Privacy and Consent – pt5 – Time for a New Mindset?
Consent is fundamental to how markets work, but can be a challenge for sectors like insurance. Will new EU regulations force the sector into a new mindset about customers' information?
Privacy, identification and the challenges insurers face
Identification could be the key privacy issue that insurers need to understand and take on board, for it raises challenges at the heart of how underwriting works.
Privacy and Identification – pt4 – we all like to put our best side forward
Identification is one of the key privacy issues that insurers need to attend to. It is however perhaps the most difficult one for them to get right. Here's why.
Privacy and Surveillance – pt3 – insurers need some mutual self insurance
How well have insurers been managing the balance between the privacy concerns that surveillance can give rise to and the need to effective counter fraud measures? And what's in it for the insurance sector for doing so?
Privacy and Surveillance – pt3 – a balancing act
Surveillance is one of the key privacy issues that insurers need to pay attention to. In this post, I’ll outline why surveillance can be so unsettling and later this week, set out why it’s an issue that insurers need to manage carefully.
Privacy and Secondary Use pt2: referral fees and slippery slopes
Secondary use has been a problematic ethical issue for insurers, causing the motor market to be labelled as dysfunctional. It creates a tension for insurers that needs to be resolved in order for trust to be rebuilt.
Privacy and Secondary Use : pt1 : Context, consent and control
It's with secondary use that the UK insurance market has had most privacy problems in the last year or two. The first of two posts explaining why.
Privacy and Aggregation pt2 – ethical challenges for claims managers
In this second post about the aggregation of data, I look at the ethical and operational challenges it throws up for the insurance sector
Do the parts always add up? Privacy and Aggregation pt1
What privacy issues are policyholders most concerned about? In this short series, I begin with aggregation.
Should your premiums help fund your neighbours accidents?
Motor insurers have recently been criticised for allowing policyholders' premiums to be influenced by their neighbours' accidents. Is this unethical? The answer is obvious.
Insurance and the Privacy Controversy
Over the next 5 years, I believe tensions between the insurance industry and the general public around privacy issues will grow to be as controversial as the misselling of payment protection insurance is today. This is the first of a series of posts exploring privacy and insurance.
Can you ever get enough risk data from Telematics?
How much can we expect from telematics? Some huge claims are being made for it, but a short cast back in history shows why expectations need to be cooled.
Telematics – pt3 – fairness
If insurers become the lead provider of telematics technology, then spin-off services could produce all sorts of unintended consequences, particularly around the public's view of fairness.
Telematics – pt2 – the ethical upside
Telematics certainly raises some ethical concerns, particularly around privacy. It does however have an important ethical upside.
Telematics and privacy
Telematics looks set to revolutionise motor insurance. Insurers need to focus on the transparency and confidentiality issues it raises and how those are to be respected through the policy lifecycle.
Ethics and Information
As three insurers plead guilt in an Irish court to having information obtained illegally by a private investigator, is it now time for the insurance sector to see a clearer and stronger tone from the top to drive out these practices once and for all?