Is too much data for general insurers a good thing?
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The question was asked by Cristina Nestares, UK chief executive officer of general insurer Admiral, who chaired a panel at the annual conference of the Association of British Insurers on Tuesday.
Data as a force for good
Craig Thornton, general insurance, protection and investments director at Lloyds Banking Group, said with 20m active digital users registered with Lloyds in the UK, the company is responsible for keeping their data safe even if there are no regulatory requirements regarding how the data is used.
“I deliberately avoid the word 'legally' because that's a minimum requirement of any organisation. There are an awful lot of things where people will look at regulation and say ‘Well, you can do this. It's not illegal, it's not against the rules.’ But that doesn't pass any test within Lloyds in terms of whether that's okay.”
Thornton said the more data insurers have, the better it is for them to help customers, but added the industry should focus on improving customers’ lives when using data.
“We do an amazing thing as a sector that we turn up when people really need us when life has turned to be pretty unpleasant. What we would all like and what society would prefer is that we didn't have to turn up, that we will make our products cheaper and make people able to manage their own risk better,” he said.
“Our responsibility, in the way we demand the data that we have at Lloyds is, keep it safe, not keep it for too long, use it responsibly and ethically. Primarily, use it to try and make people's lives easier, and to help them reduce their own risk so they don’t need us as much.”
Where do you draw the line?
Asked at what point the use of data becomes unethical, Thornton admitted there is no right answer to the question but said the line is “within the culture of organisations as to what they do and don't feel comfortable [with] versus the competitive pressures”.
He added: “What you can't end up doing as a commercial organisation is writing everything that everyone wants for a price that doesn't add up, because then you're not sustainable, you're not managing risk to your organisation.”
Nestares said looking at market data about the use of telematics to access drivers’ performance, she noted for high-risk drivers, “the likelihood of [causing] an accident is more than half and the likelihood of causing somebody else to have bodily injury is quite high”.
She described the use of data as a societal “obligation” to assess, in this case, “what people are causing to others”.
How do you keep up with changing data?
Customers’ personal circumstances change over time, but Thornton noted there is “a bonus” of being part of a retail bank.
“As an insurer, you tend only to find out when other people start missing payments or call you up or contact you online that their circumstances have changed... The beauty of being part of an organisation where you have people's current accounts is that you get far more frequent contacts and indicative data that gives you early warning signals,” he said.
Thornton said his organisation uses such data to “join the dots” and provide solutions to adapt to changing customers’ needs.
With pure insurance data, “you don't find out very quickly”, he said.
Is too much data a good thing for your organisation?
