Price optimisation for insurance - optimising price; destroying value?

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The underwriting practice of ‘price optimisation’ has opened up a debate about insurance pricing, with the insurance sector facing calls for innovation, as well as accusations of unfairness.

Price optimisation is on the rise in UK insurance, driven by the insight that underwriters gain from big data. Yet it is proving a divisive practice, with US regulators increasing banning its use in personal lines markets.

In his latest Thinkpiece, Chartered Insurance Practitioner Duncan Minty considers how these events might influence the FCA’s current market study on big data, and what steps insurance firms might consider taking now to prepare for the regulator’s response.