FLEECED BY THE INSURANCE SPIES

How personal data is plundered by insurance firms — who then charge you more if they think you can afford it

INSURERS are exploiting sensitive data to hike bills, a Money Mail investigation reveals today.

Firms now spy on shopping habits, credit records, social media posts and even phone usage before setting premiums.

They also assess how likely an individual is to switch to a rival. Those judged unlikely to shop around – typically the elderly or ‘cash rich and time poor’ – are hit with higher renewal rates.

The Financial Conduct Authority is understood to be so alarmed by the tactics that it is investigating the issue.

The watchdog also fears that new data protection rules which came into force yesterday may not help – because customers will still mistakenly allow their personal details to be abused.

Marc Gander of the Consumer Action Group said customers were being punished for loyalty. ‘This is a shocking way to treat people,’ he said.

‘It is seeing customers as a statistic to exploit and it is an abuse of their loyalty. The insurers might claim that this is for the benefit of policyholders but that is nonsense. The insurers are the real winners in all this.’

Research suggests that customers who do not switch insurer are overcharged by a total of around £800million a year. Traditionally, firms set premiums using the personal details supplied by a customer, such as their age and postcode.

However, companies now have access to a wealth of extra information – so-called Big Data. This can include loyalty cards, government records and even logs from

call centres. The detailed picture allows the firms to predict a customer’s behaviour – and their likelihood of shopping around.

A recent blog from the accountancy firm PricewaterhouseCoopers, which advises big insurers, lays bare the tactics. It says firms can use data from loyalty cards to determine how wealthy a target is – and whether they would swallow a big price hike.

Information from price comparison websites can give a clue to how financially savvy a person is, with those more likely to switch credit or savings accounts deemed more likely to change insurance companies.

The time of day that a customer visits a store, or calls a telephone helpline, serves to indicate how busy their life is.

It is legal for insurance firms to use such data, provided customers have ticked the relevant consent forms with the companies or comparison websites they supply their details to. The new GDPR rules introduced yesterday state that customers must give ‘informed consent’ to having their data shared between companies.

However, terms and conditions are often so confusing and lengthy that customers do not realise how their data is going to be exploited. Its use may even be made a condition of using a service.

The FCA believes customers who are most likely to stay loyal are secretly being charged more than those who insurers fear will leave if they are not offered a good deal. Andrew

‘Deeply personal areas of our lives’

Bailey, its chief executive, warned about the tactics earlier this month.

He told a conference of industry chiefs that more access to data ‘could lead to unfair outcomes, particularly if the person is vulnerable or there is a risk of someone being financially excluded’.

He added: ‘If competition is working well in a market, it should not overly disadvantage existing customers over new ones.’

Mr Bailey warned insurers that customers may rush through terms and conditions without appreciating the implications.

And he called into question the value of ‘informed consent in a world of large-scale data processing’.

Tom Fisher, a spokesman for the campaign group Privacy International, said: ‘There is a lack of transparency here.

‘Should we not know when, how and what data is being used to make consequential decisions about our lives?

‘Much of this data can reveal deeply personal areas of our lives, including our gender and race, and exploitation to make judgements about who we are is unacceptable.’

James Daley, of the consumer group Fairer Finance, said: ‘People who aren’t proactive shouldn’t be penalised with pricing.

‘If anything insurers should be trying to make contact with those who keep accepting higher premiums year after year.’

Insurance companies have been under scrutiny over the rates they charge existing customers when their policy ends.

They have been accused of offering cheap deals to new customers, but higher premiums to existing ones. They were also accused of hiding increases from customers by not telling them how much a policy had gone up by. A Daily Mail campaign forced the industry to put the previous year’s premium on renewal letters.

A spokesman for the Association of British Insurers said last night: ‘Insurers continually review the factors they use to assess risk, so that they can set premiums as accurately as possible.

‘Each insurer will decide on the information that they consider relevant. Insurance is a very competitive market and we encourage customers to shop around for the best deal for their needs as many do.’