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Published 21 September 2016
The FCA has decided not to undertake a full market study on insurers' use of big data. The statement was made in the recently published Feedback Statement (FS16/5), which reports on the main findings from the November 2015 call for inputs: Big data in retail general insurance.
The FCA focussed its enquiry on private motor insurance and home and contents insurance. Whilst recognising that big data has the potential to transform practices and products across the retail GI market, the FCA wanted to understand more about its use and the associated benefits and risks.
In connection with the concerns on pricing practices, the FCA has published an Occasional Paper on price discrimination and cross-subsidy in financial services.
The FCA says that using an increased amount of data to more accurately underwrite a customer does not in itself cause the FCA concern, provided collection and use of such data are in line with the ICO guidelines and the DPA. In particular, firms processing data must obtain the individual’s consent to their personal data being collected and used in the manner and for the purposes in question. Despite this statement from the FCA, which is legally incorrect(!), they do clarify in footnote 47, that other processing conditions are available, which will leave many regulated firms breathing a sigh of relief.
Firms must assess whether their use of particular data sources is in line with FCA Principles for Businesses, including treating customers fairly and communicating information to them in a way which is clear, fair and not misleading.
The FCA plans to jointly host a roundtable with the ICO for stakeholders from the retail GI industry including consumer groups with the aim of discussing the increased use of data sources and what data protection risks arise as a result.
To view the Feedback statement click here.
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