Regulators need education on big data
Explaining what big data is, how it can be used and its benefits to regulators is an important issue for the property/casualty industry—not least to dispel the notion that insurers use such information to their own ends and not to benefit customers, Kurt Bock, the incoming chair of the PCI’s board, told PCI Today.
“One of the things that the industry is absolutely focused on, now and as we go into 2018, is all the issues around big data,” said Bock.
This breaks down into several different areas. One is how insurers use the vast amount of data now available to them in a way that ensures it is secure and protected from external threats.
“The second part is helping our regulatory system, our state regulators, understand what exactly we use the data for,” Bock said. “There has been, over the last few years, a view that insurers use data for their own benefit and not for the customer’s. But that is not something the industry would agree with. In fact, it is being used to serve our customers better.”
He added that the third aspect to the debate is how insurtech is changing the industry and driving innovation, often underpinned by better data. “That’s the efficient use of data,” he said.
According to Bock, regulators need to be educated about big data and that wider innovations are being used by the industry to meet customer needs and experience, and price risk more accurately.
“All this needs to be explained to regulators so they understand that big data helps the industry to articulate risk and price better,” he said.
For example PCI, which is domiciled in Illinois, recently spent time with its state regulators explaining how it uses data. Bock said that there is a view from some corners, including some consumer advocates, that data is being used inappropriately to price areas where insurers don’t want to do business.
“One thing we and the industry have always said is that we will sit down with our regulators and explain pricing models. We’ll explain our data use to them, so that they can understand what we’re using it for—not just for price but also for underwriting and the things that are meaningful to a customer,” he concluded.
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