In November 2015, the FCA published a call for input on ‘Big Data’, ie the use of new or expanded data sets, new technologies to generate, collect and store data, and sophisticated analytical techniques. The call for input focused on its use in retail general insurance, and in particular three main topics:
- whether the use of Big Data affects consumer outcomes;
- whether the use of Big Data fosters or constrains competition; and
- whether the FCA’s regulatory framework affects developments in Big Data in retail general insurance.
On 21 September 2016, the FCA published a feedback statement to this call for input. Generally, it found that Big Data was broadly working well for consumers in motor and home insurance. However, it identified potential areas for consumer detriment: the use of Big Data might increase risk segmentation resulting in higher risk consumers being unable to obtain affordable insurance; and the possibility that firms may use Big Data to identify opportunities to charge certain customers more. The FCA will conduct an exercise to examine this aspect in more detail, and may take further action on both aspects if it considers it necessary.