The Financial Conduct Authority (FCA) is calling for more information from general insurers on Big Data, which may lead to a market study or adjustment of policy or guidance.
On Tuesday, the financial regulator issued “calls for inputs” focusing on three areas: consumer outcomes; competition; and feedback on FCA’s current regulatory framework as it relates to Big Data.
“Big Data is having an ever-growing social and commercial impact, and has the potential to transform practices and products across financial services,” said Christopher Woolard, director of strategy and competition, FCA, in a statement. “We are starting our work on Big Data by seeking to better understand how insurance firms are using data, and how this may evolve in the future.”
Big Data remains a major part of the financial sector but the spotlight has shifted to insurers who can use information collected about consumers to calculate insurance rates. Social media can also help insurers verify critical information about a customer’s claim such as if two people are connected prior to an accident.
A Financial Times article points out that consumers are increasingly concerned about how their information is being used when they sign up to websites. According to a report by the Association of British Insurers in 2013, about 71 percent of consumers would be dissatisfied if their insurers were pricing their products based on information collected from social media.
In many cases, prior to launching a full study, FCA begins by requesting, “calls for inputs”. Data collected are then used to determine next steps for the industry. Based on the results of the study, FCA can prohibit certain products or require that more structure should be added to business lines.