Home and motor insurance pricing practices have come under scrutiny in the past few years. Just recently, the Financial Conduct Authority implemented a set of remedies aiming to improve outcomes for consumers, amid concerns that the market isn’t working well for many.
It’s timely, then, that we have just published our second thematic review report, sharing the findings of our review of actuarial involvement in pricing UK home and motor insurance.
The review findings centre on two key elements in the context of actuaries sharing responsibility for pricing with other professionals:
- An increased focus on customer fairness, ensuring standards, guidance and education appropriately balance fairness with commercial and innovation drivers
- Ensuring that advances in data science and machine learning modelling are adequately covered by standards, guidance and education.
“Our findings support the continued involvement of actuaries in this key area of work, alongside specialists from other disciplines and backgrounds,” notes review actuary Alan Marshall. “It’s important that actuaries continue to harness their skills and influence in a way that acts in the public interest for both their organisations and the consumers to whom they provide insurance cover. This challenge is perhaps one that applies to pricing far more than reserving or capital work.”
Read the report, General insurance: involvement of actuaries in pricing for UK home and motor insurance, at bit.ly/2SK9ogu. The IFoA is grateful to actuaries and organisations who contributed.