Insurance data sharing exposes ‘fundamental tension’ in customer expectation

There is a “fundamental tension” between consumers’ desire for cheaper premiums and their willingness to share more of their data to ensure more accurate pricing, a study commissioned by the ABI has found.

The research was carried out through agency BritainThinks to gauge public attitudes towards use of personal data in general insurance products using workshops and a survey of 2,000 members of the general public.

The survey found that only 9% of consumers are comfortable with insurers using information collected via third party companies - data brokers - yet 64% said that insurance premiums should reflect the customers’s exact level of risk.

It also found that only 29% of those surveyed felt confident that they understood how their premium was calculated.

ABI director, general insurance policy, James Dalton said the use of more personal data in insurance ”has clear benefits for customers, who can benefit from more accurate and fairer risk pricing.

No clear public consensus on how insurers should best be assessing risk and reflecting that in prices

James Dalton

”But it does pose some reputational risks, if people see it’s use as unjustified or unclear.

”This report shows that there is no clear public consensus on how insurers should best be assessing risk and reflecting that in prices.

”It gives a valuable insight into the issue to stimulate industry debate, and the ABI will use the outcomes of the research to develop further industry work for the coming year.”

While Deborah Mattinson, founding partner at BritainThinks said the research showed ”a fundamental tension in how customers feel about the sensitive issue of their data: on the one hand, they want to see the benefits of sharing their data, whether it’s cost savings or more personalised services, but on the other, they are often concerned about how their data is being accessed and the extent to which this is within their control.

”This is a shared challenge across multiple sectors and raises some important questions for all organisations in the data ‘ecosystem’.”

The survey also found that 82% of respondents would feel vulnerable without insurance, and 36% felt that premiums should be spread across all customers to ensure affordability.

Perhaps unsurprisingly, younger customers were more likely to be comfortable with insurers using monitoring technology such as telematics.