The Financial Conduct Authority (FCA) has admitted it is concerned about the possibility of people being excluded from insurance as products become more personalised.
Addressing the Treasury Select Committee of MPs, FCA executive director for consumers and competition Sheldon Mills acknowledged the issue of people being left behind from risk pooling was on the regulator’s radar.
“It is a concern,” Mills (pictured) said. “I don’t think it’s a major risk now, it is a risk as we move into models which are much more based on personalisation of data.
“At the moment most insurers are using data to be more precise in terms of their risk-based pooling and their pricing and premiums that they offer and I imagine that would continue.
“It is a risk we need to monitor and continue to understand.”
However, Mills noted that data is going to change the way in which many financial services will be provided and that regulators have to find ways to ensure this was done sensibly.
“There will be some challenging choices as we go forward in society,” he said
“The thing I worry about more in insurance is more about where there are significant risks which are too costly on a personalised basis or on a risk-based pooling basis to insure.
“And we are seeing those grow with issues around climate change and other issues in society and I think those are areas we all need to focus on and tackle,” he added.