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FCA to review insurers’ use of big data
UK regulator the Financial Conduct Authority (FCA) is set to conduct a review into how the insurance sector in the country incorporates big data analytics technologies into its activities.
The decision was announced as part of the organisation's 2015/16 Business Plan report, which noted the financial sector is likely to face increasing risk in the coming years as the fast pace of technological change is felt across the industry.
Chief executive Martin Wheatley said the market study will examine how insurance providers use solutions such as web analytics, behavioural tools and social media analysis to gain insight into increasingly large volumes of data, Computerworld reports.
The report added: "We will identify potential risks and benefits for consumers, including whether the use of big data creates barriers to access products or services. We will also examine the regulatory regime to ensure that it does not unduly constrain beneficial innovation in this area."
Commenting on the review, financial services and technology law expert at Pinsent Masons John Salmon said the study will help provide insurers with a better idea of the regulator's position on big data and what they will have to do to remain compliant when dealing with this information.
A recent industry forum organised by Pinsent Masons revealed companies in this sector view legal compliance and regulatory issues as posing the biggest challenge to operating effectively in a digital environment.
Mr Salmon therefore welcomed the FCA's study, saying it should offer insurers greater clarity on how they can make innovative use of data while at the same time meeting their obligations to treat customers fairly.
Such information will be vital, as the insurance sector has already been a leader in the use of big data technologies to get a more complete overview of their customers' behaviour.
"This is perhaps best evidenced in the telematics market, where data from 'black box' recorders is helping insurers to personalise motor insurance premiums and reward good driving," Mr Salmon said.