FSCS urges insurance industry to make ‘holding of clear customer data’ mandatory

The Financial Services Compensation Scheme (FSCS) has highlighted the importance for brokers and insurers obtaining and holding clear customer data. 

Marshall Bailey, the FSCS’s chair, told Insurance Times: “We would like insurance companies to take an ownership of that information, of course corresponding with GDPR and the structure of the insurance market.

“But there is no requirement for insurance companies through the broker acquisition model to hold that client information. We can’t change that unilaterally at the FSCS, but we would like the construct to change.”

It follows the FSCS making three new board appointmentsm, including former secretary of state Nicky Morgan, in a bid to reduce the firm’s rising levy by rooting out “bad actors”.

Back in March, FSCS chief financial officer Jimmy Barber revealed that up to 30% (924,760) of customers for collapsed unrated Danish insurer Alpha were still untraceable.

In some instances with collapsed unrated insurers, it has taken FSCS two years to locate customers. 

Data standards

Speaking about whether there should be a data standard in place for brokers and insurers, Bailey said: “I think the ability to be in contact with customers to ensure that they receive the outcomes they have paid for, needs to be established.”

But he added that there are further complexities that customers face like the insurer being hidden within the policy, and this is because many policies are white labelled. This means that the insurer sits behind the policy that another company has its own branding on.

Although he made it clear that it is “not a bad thing” that the financial services industry is complex.

”The existence of complex structures and legal entities, various jurisdictions, and specialisms around the management of insurance is a good thing,” he said. ”Bermuda exists as an insurance specialist hub for a reason – there are lots of people that are insurance specialists there.

“London is a financial centre, [and you also have] Edinburgh, Glasgow etc. These are highly specialist locations with access to pockets of talent, and we are not opposed to any of that, we are supportive.”

Read more…FSCS hopes to cut insurance levy by working with industry to root out “bad actors”

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