Increasing reliance on technology could leave some people uninsurable, the ICAEW warned this week.
Smartphones, wearable tech, search engines and social media all present potential risks for the people accountants represent, the accounting body cautioned in its latest Audit Insights: Insurance report.
The institute explained that supermarkets and smartphone providers hold more data on individuals than insurers. The information people tweet, their buying habits and destinations they program into car sat navs can all be gathered and used to potentially offer better value. But ICAEW financial services assurance manager Phillipa Kelly warned: “If such data sharing became a condition of getting a policy, we would need to be careful about who is being unfairly disadvantaged.”
An example could be health insurance offered at a lower premium to policy holders who provide data such from health apps or wearable tech such as FitBits.
Those not able to provide that kind of information might be considered higher risks and could be “priced out of insurance altogether and we get uninsurables”, Kelly said. Factors that could compromise how insurable people are might include where they live, genetic conditions or cyber risk.
“Insurance protects us against risks we face in everyday life but can’t necessarily bear the cost alone. It depends on groups of people being exposed to similar risks and seeking similar cover. Increasingly, technology means there is so much data about our own individual risk factors that it no longer makes sense for companies to group us together,” Kelly said.
Speaking about technology’s influence on insurers’ perceptions, ICAEW president Michael Izza wrote: “Those with higher risk factors - over which they have no control - may be no longer able to afford cover. This challenges the social purpose of insurance, and there may well be a need for intervention.”
The recent floods in the northern part of the United Kingdom demonstrated why insurance needed to remain accessible to vulnerable people. “With terrorism risk in major cities or the recent flood disasters, the government stepped in so insurance is still available to people who need it,” Izza said.
“People are often disadvantaged already by known risk factors like postcode, but increasing data means there will be more potential for people to be priced out of insurance cover.”