DIGITAL SERVICES AND PAYMENTS INSURANCE

FFI’s Kivisaari: Data facilitates insurance business but carries its own dangers

FINANCE FINLAND

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  • Digital data enables the insurance sector to utilise massive amounts of information.
  • Before this mass data is utilised, it needs a comprehensive set of ethical rules.

Data ethics is one of the topics in the European Insurance and Occupational Pensions Authority EIOPA conference on 13–15 September. The theme of the three-day conference is The Insurance Sector in the Aftermath of the Covid-19 Pandemic.

Insurance has always made use of all kinds of information technologies and data. The volume of digital data is now growing exponentially and being processed faster at the same time as the costs are falling. Data facilitates insurance business, but there are pressing ethical considerations related to its use.

“Conventionally, an insurance customer has had better insight on their own situation and proneness to accidents than the insurer. After data collection enables better access to information, the situation may change to the unfair advantage of the insurance company”, says Esko Kivisaari, deputy managing director of Finance Finland and panellist in the EIOPA conference.

The role of data and analytics is to add to an insurer’s business operations and reduce risks. If this goes too far, taking out an insurance policy no longer serves the interests of a customer. Kivisaari refers to such technology as ‘weapons of math destruction’, paraphrasing data scientist Cathy O’Neil.

“The success of insurance activities should be evaluated in the context of how well they prevent social exclusion and reduce the gaps in insurance coverage. Once insurance succeeds in its main function, which is to spread the risk over all policyholders, it can turn in good sustainable results.”

“The success of insurance activities should be evaluated in the context of how well they prevent social exclusion and reduce the gaps in insurance coverage.”

ESKO KIVISAARI, Deputy Managing Director