Andrew Bailey says there should be some limits to its use
FCA boss Andrew Bailey says Big Data should be used to reward good drivers but he stressed that there should be some limits to its use.
Bailey said big data could allow the industry to base its decisions on individual behaviour rather than assumptions about different groups of people.
As a result, this method could encourage better driving.
But he cautioned against insurers using data about which customers were likely to shop around for policies.
Bailey said: “There has been a revolution in our ability to capture and use information in our lives. Insurance provides the service to manage risk in many areas of our lives. This emphasises its importance, but also puts it squarely into the world of public policy.
“Big data could be used to identify customers more likely to be inert, and insurers could use that information to differentiate pricing between those who shop around and those who do not.
“The latter pay more and thereby can cross-subsidise those who do shop around.
“We are therefore asked to exercise judgement on whether as a society we should or should not allow this type of behaviour. To simplify, our view is that we should not.”