How your banking habits and other personal data are affecting your insurance premiums...

14 July 2014

privateWe’d all like an extra 20% discount on our car insurance, right? Well it seems that some insurers are offering up to a fifth off car insurance premiums for ‘prudent’ people.

Some insurance firms claim that they have found a strong link between people who are prudent with their spending and those less likely to take risks while driving. If you’re careful with your money, you’ll be careful on the road. This means that Lloyds insurance arm Scottish Widows is apparently offering up to 20% off to certain customers who, for example, stay within their overdraft limits, or never need an overdraft, or who never miss a credit card payment.

Of course, this doesn’t mean that renewing car insurance becomes a more labour-intensive process, requiring drivers to detail their financial histories in order to try and get a discount. Instead, this is just part of the ‘big data revolution’ which sees businesses using consumers’ personal information in new and exciting ways. And Scottish Widows aren’t alone.

We’ve known for years that Tesco monitors the shopping habits of Clubcard holders, and Tesco insurance reportedly offers discounts of up to 40% on home and car insurance to those whose shopping habits indicate they would be a careful driver. However, they are not forthcoming on which products are so indicative. Aviva changes house insurance premiums depending on the exact location of properties on a street.

But while no one is going to be miffed at being offered an un-requested 20% discount, as with everything else in life, the fear is that this is, in fact, a double edged sword. While those with ‘good’ financial habits are offered money off, are those struggling to make ends meet going to be penalised even further by higher premiums? Apparently not.

A spokesman for Scottish Widows told the Telegraph that “this use of the data we hold is allowing us to offer discounts on motor insurance to customers who tend to show care in areas like personal finances. But we will not be using this information to increase premiums.” Sounds pretty categoric. For now anyway.

However, privacy groups remain unconvinced, and consider this alternate use of data to be a breach of trust by holders of super-sensitive data.

Emma Carr, acting director of Big Brother Watch, said: “Despite this being within the law, the way many companies go about doing this is underhand and goes far beyond what customers would expect them to do with their data.”  She called on insurers to give customers the option of explicitly opting-in to the use of big data rather than just allowing them to opt out, if consumers are even aware of how businesses are using their data.

So what do you think? Is it OK so long as it only confers positive benefits, or will the sharp side of the deal inevitably turn up before long?

TOPICS:   Insurance

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