In November
2015, the Financial Conduct Authority (FCA) announced that it would investigate
the use of big data in general insurance (GI), focusing on private motor and
home insurance, and would seek input from industry stakeholders and experts. As
an insurtech specialist in the GI sector, RDT provided a written response to
questions on data usage – and was the only technology company that the FCA
named as a contributor.
The FCA’s
questions covered data sources, data accuracy, and how the growing use of
digital information might impact consumers and businesses. The aim was to see
if big data would foster or constrain competition, whether some consumers might
be marginalised because of an increasingly granular approach to underwriting,
and whether the regulatory framework needs adjusting in light of advances in
technology.
With the
help of RDT’s insights, the FCA has concluded that big data is more friend than
foe. In its Feedback Statement, published on 21 September, it said that big
data is “producing a range of benefits for consumers in motor and home
insurance, by transforming how consumers deal with retail GI firms, encouraging
more innovation in products and services and streamlining parts of the customer
journey.” The FCA said that because the use of data by insurance firms is
“broadly working well”, it would not launch an in-depth market study.