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Insurers must be transparent in how they use data

By Susan Yellin | June 17 2020 02:55PM

Photo: Freepik

Insurers and other internet-savvy companies must increasingly turn their attention to the issue of data ethics, particularly as customers continue to ramp up their use of online tools, speakers told the Insurance AI and Innovative Tech Virtual conference in late May.

Insurers need to collect, process, share and use customers’ personal data all the time, and they are also increasingly recognizing the importance of data ethics to consumers. But Jim Tyo, chief data officer at Nationwide Insurance said the industry needs to do more than that. Tyo said insurers must be transparent about what information they have and how they intend to use it to the benefit of consumers, partners and even internally.

“From a legal, regulatory and compliance nature we may be able to legally use certain types of data to make decisions,” Tyo said during a panel discussion. “The question companies like Nationwide are wrestling with is: should we? Is that in accordance with the mission? Transparency and applying the right kind of ethical standards, I think, will be paramount in this new customer information-rich world we live in.”

Mano Mannoochahr, senior vice president and Chief Data and Analytics Officer at Travelers, said consumers want to use online tools and there is no question in his mind that their usage will progressively grow as time goes on.

As this happens, Mannoochahr said insurers have a responsibility to stakeholders and partners to make sure they are transparent in how they use the data. He said Travelers has been working on a “responsible AI framework,” and is now going to design a set of principles that it will put on its website to inform customers of what it does with its data.

“This is about building and keeping that trust if we want adoption of our digital tools,” he said. “We’re doubling down to meet the needs of customers who are looking for a digital experience. We’re not slowing down.”

Vehicle telematics systems

Mannoochahr specifically pointed to Travelers’ announcement regarding vehicle telematics systems and how the insurer can provide fleet managers with data such as vehicle location, better communication with drivers on the road and navigational support – and also driving behaviours like speeding, abrupt lane changes and idling.

On its website Travelers talks about the importance of getting buy-in from drivers for the telematics program and how to have an open discussion with them.

Tyo said COVID-19 has not put a damper on his company’s strategic vision for data and analytics, and in fact the current situation has spurred further awareness and emphasis on data and how Nationwide can get to its vision faster and more efficiently.

Jim Wray, senior technology specialist and manager at Microsoft, agreed, saying the pandemic laid bare any kind of deficiencies where a company didn’t have a good handle on its customers, good data operations and insights into customer experiences.

“The folks who have been ahead of the game – those are the folks who are able to capitalize and accelerate the work that they’ve already been doing.”

Scam artists and COVID-19

Regulators around the world are grappling with data and how to prevent scams, with COVID-19 being just another reason for scam artists to take to the phone lines. Since the federal government outlined the Canadian Emergency Response Benefit (CERB), it has become the subject of a number of scams.

The Canadian Anti-Fraud Centre has reported that between the beginning of March and the end of May, 269 people reported they were victims of COVID-19 fraud to the tune of $1.8 million.

The centre cautions that scam artists from around the world phone unsuspecting people claiming they are from firms such as loan companies, the Centers for Disease Control and Prevention, the World Health Organization and the Public Health Agency of Canada. They say their firms offer everything from loans, debt consolidation and other financial assistance services. Some callers phone in posing as unknown financial advisors pressuring people to invest in hot new stocks related to the disease or private companies offering COVID-19 test kits.

Protecting client data has accelerated particularly since the European Union compiled wide-ranging regulations that apply to other countries doing business in Europe, known as the General Data Protection Regime (GDPR).

In Canada, the Investment Industry Association of Canada (IIAC) has sent a letter to its members, outlining the GDPR transparency and compliance requirements. IIAC managing director Susan Copland writes in the letter that she hopes Canada’s current Personal Information and Electronic Documents Act (PIPEDA) follows suit.

“In order to demonstrate appropriate due diligence, [Canadian] firms will be expected to undertake vetting and contractual measures in respect of their third-party suppliers to ensure they have appropriate measures in place to protect clients’ data. Given the firms’ ultimate liability, contracts will likely include provisions that mitigate the financial effects of liability if such measures fail,” Copland writes.

Recent surveys of consumers have also shown that consumers are more likely to trust companies that give them control over their information.

At the same time, insurtechs need to be able to respond in the way their clients want, not force them into expectations they don’t want, Richard McCathron, Chief Insurance Officer at Hippo insurance, told the U.S. AI conference.

Clients who want to go digital to make a claim should be given free rein to do so, but there are those who want to talk to an agent to make a major claim and they should also be given the go-ahead to do it that way, said McCathron, whose company offers property and casualty coverage.

“I think the mistake that a lot of insurtechs make is that they are trying to change human behaviour when bad things happen. At claim time we have a lot of automation to make us more efficient, but when it comes to the customer, we are very much high touch and empathetic,” said McCathron. “The mistake being made is trying to force square pegs into round holes.”

Jim Albert, chairman of Neptune Flood agreed saying his company also has a direct-to-consumer channel as well as an agency for those who want the trusted experience of having an advisor to talk with.

Like a lot of other companies right now, insurers need to be nimble and adjust to client needs, especially since many not only sell to individuals but partner with other insurers, real estate agents, homebuilders and loan services, said Albert.

 
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