Currencies

China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

Continue Reading

Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

Continue Reading

Banks

Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

Continue Reading

Currencies

China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

Continue Reading

Financial

Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

Continue Reading

Categorized | Insurance

UK insurers warned by regulator over use of big data


Posted on November 22, 2016

The head of the UK’s Financial Conduct Authority has warned insurers there should be limits to their use of big data so groups of customers are not unfairly penalised.

Speaking to the Association of British Insurers, Andrew Bailey said there had been “a revolution in our ability to capture and use information” but added that there had to be boundaries on the way that information was used. 

Data is an increasingly contentious area as insurers seek to use information to make more accurate pricing decisions. This month Facebook blocked Admiral, the car insurer, from using posts on the social media site to make decisions about pricing. Admiral had hoped that the language used in the posts would provide clues about driving style. 

Mr Bailey said the use of big data could allow the industry to base its decisions on individual behaviour rather than assumptions about different groups of people. This could be a good thing in car insurance, he said, because it could encourage better driving.

But he added that in other cases there were dangers — for example in using data about which customers were likely to shop around for policies.

“Big data could be used to identify customers more likely to be inert, and insurers could use that information to differentiate pricing between those who shop around and those who do not. The latter pay more and thereby can cross-subsidise those who do shop around,” he said.

“We are … asked to exercise judgment on whether as a society we should or should not allow this type of behaviour. To simplify, our view is that we should not,” he added.

Mr Bailey also weighed in on the debate surrounding the use of genetic data to influence pricing for health and life insurance. 

“The implications for life insurance are potentially profound … Now, maybe the reaction to improved identification is to say ‘it is what it is’ and we accept the implications for purchasing life insurance. Or, maybe we say that it creates unacceptable divisions within society — outcomes that are not acceptable for society in terms of access to insurance,” he said. He added that the solution to the issue was something for the government, rather than just regulators, to decide.

Jamie Monck-Mason, an executive director at Willis Towers Watson, welcomed Mr Bailey’s comments. “It is encouraging to see that the FCA is open to — and indeed positive about — the use of big data by insurers, albeit in the context of wider public policy principles,” he said. “The use of big data opens up a world of commercial opportunities for the insurance sector — and it is clear that Mr Bailey welcomes those opportunities for the good of the sector — but it is refreshing to see the FCA inviting insurers to look at the longer term and the bigger picture.”