Out-Law News 1 min. read
05 Jan 2016, 1:35 pm
The Times newspaper reported that the FCA was to shelve plans to scrutinise how insurance companies are using big data. However, in a statement the FCA said that a call for inputs on the subject that it started in November 2015 is still open and that it would decide what "its next steps" will be based on "the findings" from the consultation exercise. The call for inputs closes on 8 January.
"The FCA will use the findings from this call for inputs to determine its next steps, including whether a market study, adjustments to policy or guidance or any other form of intervention is appropriate," the FCA said. "The FCA will publish a Feedback Statement mid-2016 detailing the findings from the call for inputs and any necessary next steps."
When it opened its call for inputs the FCA said it wants to know whether insurers' use of big data affects consumer outcomes, fosters or constrains competition and whether its own regulatory framework affects how big data is deployed in the retail general insurance market. Its focus is particularly on the private motor insurance and home and contents insurance markets.
In scrutinising big data's impact on consumer outcomes the FCA said it wants to find out more about the profiling insurers engage in and how "micro-segmentation of risk" impacts on consumers' access to insurance coverage.
The FCA said it also wants to gain a greater understanding of how insurers assess consumer characteristics and how that data affects "pricing practices", as well as how consumer behaviours, such as driving habits monitored in the context of telematics-based motor insurance policies, affect consumer outcomes, including where consumers are "unable or unwilling to generate certain types of data".
The FCA said it also wanted to gain a better understanding of big data's impact on competition in the insurance market. Among the issues it said it wanted input on was on whether new entrants to the insurance market have sufficient access to "critical data".