Data reforms could have a dark side

Hot on the heels of open banking, we might now also be entering the era of open insurance. But a study commissioned by the Financial Rights Legal Centre, a community support organisation, shows it’s not without risk.

The Consumer Data Right, which is being applied to banking, could be extended to insurance.

Richard Tooth, author of the study, says open insurance, and open data generally, offer a range of opportunities and risks for consumers. “Greater access to data could lead to improved and new services in areas such as product comparison and financial management,” he says.

Implementation of the Consumer Data Right has the potential to provide consumers with many benefits, including the ability to access specified data about them held by insurers, and to authorise the secure disclosure of that data to third parties.

Karen Cox, chief executive of Financial Rights, says increased access to, and use of, consumers’ own data could improve disclosure processes when buying and renewing insurance.

“There is also the potential that data can help consumers and insurers work together to produce improved personal and social outcomes in the face of increasing natural hazards born of climate change,” she says.

Yet there could be a dark side should the reform be successful.

“Large numbers of people may find themselves unable to access insurance, claim on their insurance, or contest their premium increases,” says Cox. “As the insurance industry begins to use new data collection techniques, artificial intelligence systems and algorithms, we need to ensure that consumers’ personal information is kept safe, secure and not used against them.”