Big Data set to transform Australia’s insurance industry
The Actuaries Institute launched a Green Paper on Monday (14 November) on how Big Data is transforming the insurance industry.
Commissioned by the Institute, prepared by Deloitte Australia, and with significant contributions from Institute practice committees and working groups, the Green Paper entitled The Impact of Big Data on the Future of Insurance considers some of the public policy issues that will face society as insurers price policies on a more individualised risk basis.
“Improved data will produce winners and losers amongst insurance customers,” the report said.
This is the first of the Institute’s thought-leadership publications to focus on Insurance and ‘big data’ and follows on from the Institute’s previous publications:
- Unlocking Housing Wealth – options to meet retirement needs;
- For Richer, For Poorer – Retirement Incomes;
- Who will fund our Health? and
- Australia’s Longevity Tsunami – What Should We Do?
The Paper release coincides with the Productivity Commission releasing their Data Availability and Use draft report earlier this month, that recommended a major overhaul of Australia’s data policy framework, including the introduction of a Comprehensive Right to give people more control over their data.
Elayne Grace, Deputy CEO and Head of Public Policy at the Actuaries Institute said the Paper was an important document to help insurers and policy makers consider increasing amounts of information.
“What will be the impact of genomics on life insurance, what will be the impact of ‘fit bits’ on health insurance? asked Elayne.
Actuary and Partner at Deloitte, Paul Swinhoe, co-authored the report, said privacy questions around who owns the data and how it can be used must be examined.
“Insures need to maintain confidence in data and the trust of their consumers” Paul said.
Kaise Stephan, actuary and partner at Deloitte who co-authored the paper, said it examines issues such as how increased data analysis could potentially marginalise individuals considered higher risk, even though they may not be able to control the risk they seek to insure.
“Is [the risk] because of their driving habits, which they can change, or are these risk factors largely outside their control? A flood rated zone that a person lives in for example; night shift workers who drive during the riskier night hours; or perhaps a genetic makeup of a person?” Kaise said.
The knowledge that insurers gain from extra data should lead to a potential new role for them: that of risk signalling and helping consumers to reduce their risks.
Manager at Deloitte and co-author of the paper, Marc Mer was positive about the benefits of this new proactive role for insurers.
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