‘The data dilemma’ – ABI - commissioned report highlights public split on data use

The majority of insurance customers support insurers moving towards more accurate risk pricing, but a significant minority believe that risks should be spread across all customers to ensure that insurance is affordable. This is a key finding from an ABI-commissioned report on consumer attitudes to data and insurance. 

‘The Price of Accuracy: Consumer Attitudes to Data and Insurance’ was carried out for the ABI by the independent research agency BritainThinks to explore consumer attitudes on the use of the ever-expanding volumes of personal data in the context of general insurance products. In particular, the research examined potential ‘trade-offs’ between the benefits of data sharing, and any drawbacks, such as perceived loss of privacy. 

The research was based on workshops around the UK, as well as a quantitative survey of more than 2,000 general insurance customers, to explore public attitudes to data use.

Key findings from the research show that: 

• There is widespread recognition of the value of insurance - 82% say that they would feel vulnerable without it.
• Overall, consumers appear split on the principle of how premiums should be calculated. Nearly two-thirds (64%) think that insurance premiums should reflect the customer’s exact level of risk, with 36% believing that premiums should be spread across all customers to ensure affordability. 
• Customers have a relatively shallow understanding of how insurers use data and how insurance is priced – only 29% feel confident that they understand how their premium was calculated.
• Customers are generally comfortable with insurers using data collected from them directly but are more uncomfortable with the use of data collected indirectly. Only 9% are comfortable with insurers collecting aggregated information from data suppliers (often referred to as data brokers). This points to a fundamental tension – the majority want pricing to be as accurate as possible, but, generally, they are concerned about how that data is accessed. 
• Younger customers are more likely than older customers to be comfortable with insurers using monitoring technology, such as telematics to monitor driving behaviour and activity trackers.

 

James Dalton, Director, General Insurance Policy, at the ABI said:

“This is the most detailed study yet of how consumers feel about the use of personal data. The use of more personal data in insurance has clear benefits for customers, who can benefit from more accurate and fairer risk pricing. But it does pose some reputational risks, if people see it’s use as unjustified or unclear. This report shows that there is no clear public consensus on how insurers should best be assessing risk and reflecting that in prices. It gives a valuable insight into the issue to stimulate industry debate, and the ABI will use the outcomes of the research to develop further industry work for the coming year.”

Deborah Mattinson, Founding Partner at BritainThinks, commented:

“This research reveals a fundamental tension in how customers feel about the sensitive issue of their data: on the one hand, they want to see the benefits of sharing their data, whether it’s cost savings or more personalised services, but on the other, they are often concerned about how their data is being accessed and the extent to which this is within their control. This is a shared challenge across multiple sectors and raises some important questions for all organisations in the data ‘ecosystem’.”

-ENDS-

Notes for Editors

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1. BritainThinks conducted a three-stage research project comprising of scoping focus groups, a series of deliberative workshops, and a quantitative survey of more than 2,000 general insurance customers.
2. The Association of British Insurers is the voice of the UK’s world leading insurance and long-term savings industry. A productive, inclusive and thriving sector, we are an industry that provides peace of mind to households and businesses across the UK and powers the growth of local and regional economies by enabling trade, risk taking, investment and innovation.

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4. More news and information from the ABI is available on our web site, abi.org.uk.