Four Developments Point to My Big Ethical Challenge for 2023 being Right

In January, I wrote that insurance executives had to work out how to reconcile two things: the expectations that the debate about data ethics is placing upon their firm, and the demands that their digital strategy is placing upon the business (more here). In short, it was about delivering leadership on data ethics.

These four clear developments point to data ethics needing more attention from insurance executives.  

In March, further research found that the ethnicity penalty was just as strong. The FCA now expect insurers to address the problem through their new consumer duty obligations, but I’m certain that campaigners won’t wait that long (more here). This creates a tension around expectations and delivery. It’s the sort of tension where leadership on data ethics really is needed.

In May, the EU published the ‘compromise text’ for its forthcoming Artificial Intelligence Act. Life and health insurance was designated a high risk activity and there were bans for social scoring and for most use of biometrics (more here). What has been shaping these decisions by EU policy makers is concern about how sector models and data could impact the lives of EU citizens.

So what, some UK insurance executives would have thought. That’s the wrong way of thinking, for in June, the firmer line being taken by the EU on data ethics moved a lot nearer to UK insurers, when the EU and the UK announced closer cooperation on standards and regulations in financial services (more here).

Also in June, the UK Government’s Geospatial Commission announced that location data was to be used as a test case for the application of data ethics. This will crystalise policy maker attention around what for insurers is a key piece of data (more here).

Four developments in six months then, each of which increases the pressure on insurers to demonstrate that their data and analytics are fair and non-discriminatory, and that their oversight is fulfilling their accountability obligations. For sure, leaders are paid to manage such pressures, but I’m not convinced that most leaders in the insurance sector are as well equipped as they think to navigate what are increasingly becoming treacherous waters.

The danger is that some insurance executives think that they have data ethics under control. This largely stems from their data ethics radars being short on challenge and insight. Too often, insurers rely on the reassurances of the ‘big four’ consultancies, forgetting the powerful conflicts of interest that can influence their input.

And I don’t believe that the lobbying that sector trade bodies rely on will achieve the same level of traction with policy makers that it has historically delivered. Indeed, in one or two areas, I think that previous ‘wins’ are in danger of being rolled back.

Insurers need to tune into the changing landscape around data ethics, to avoid the oncoming developments coming as surprises, perhaps even shocks. This needs a leadership that is equipped with a broader perspective on the challenges ahead. In gaining that broader perspective, the tensions that emerge in relation to some digital strategies will become apparent. How those tensions are handled is the big challenge of these times.