The UK Financial Conduct Authority (FCA) has dropped plans for a detailed review on how the insurance industry uses big data following satisfactory findings in an initial study.
In a feedback published on the market study, the authority said that the big data used by the companies has resulted in positive consumer outcomes.
The financial regulatory body said that insurance companies can use big data to change how consumers deal with them.
Companies are also allowed use the data for the development of new products and reducing form-filling, claims processing and also in optimizing sales.
In November last year, the FCA announced its intentions to study how big data was being used by companies.
Before taking any further steps in this regard, the regulator also wanted to know how big data usage was affecting consumer outcomes and competition in the general insurance segment.
According to FCA strategy and competition director Christopher Woolard, the general insurance sector can impacts millions of consumers which makes it important for the markets to operate properly.
Woolard added: "There is potential for Big Data to transform practices across general insurance markets, and some consumers are already seeing benefits but there are also some risks to consumer outcomes.
“While we have decided not to launch a full market study, we are undertaking further work in this area and with the Information Commissioner’s Office to ensure our rules and policies keep pace with developments in the market, but also do not prevent positive innovations."
The FCA concluded that it will not launch a market study as of now, but is likely to take measures to further engage with the insurance industry.
It also directed firms to ensure that use of big data is in compliance with data protection legislation and guidelines issued by the Information Commissioner’s Office.
Image : The UK Financial Conduct Authority announced that insurance companies can continue using big data. Photo : courtesy of Defense Advanced Research Projects Agency and Commons.wikimedia.org.