On May 8, the European Insurance and Occupational Pensions Authority (EIOPA) published a report setting out the findings of its EU-wide thematic review on the use of Big Data Analytics (BDA) in motor and health insurance. The aim of the review was to gather empirical evidence on the benefits and risks arising from BDA, including artificial intelligence, machine learning and cloud computing services.
The report found that there was a strong tendency towards increasingly data-driven business models throughout the insurance value train and that a majority of firms were either using, or contemplating using, BDA tools.
The report notes that there are still risks to be addressed, including ethical issues around the fairness of the use of BDA, as well as regarding the accuracy, transparency and auditability of BDA tools. It highlighted the biases inherent in data that being used could be reinforced through machine learning algorithms if firms do not have adequate governance arrangements in place. The EIOPA is going to undertake further work throughout 2019 in relation to these identified risks.
The report also sets out details of future BDA initiatives, including: the supervision of artificial intelligence and machine learning, ethics and fairness, outsourcing of cloud computing services by insurers and cyber insurance and cyber security.
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