The insurance industry’s use of big data analytics to set premiums has come under fire after an investigation found that drivers who use certain email providers are likely to pay more because the algorithms mark them down as a greater risk.
The Sun newspaper applied for insurance quotes on price comparison sites using profiles that were identical apart from the email address.
One of the UK’s largest motor insurers, Admiral, was accused of discriminating in terms of price, with a Hotmail address seemingly meaning that drivers were speed fiends, while Gmail users were seen as a safe pair of hands.
“We found that on comparison website GoCompare, Admiral charged a Hotmail driver £467.04 and a Gmail one £435.68 – £31.36 less,” The Sun said.
Admiral admitted that it does use email domains as one variable in its risk estimation algorithm, but it told the paper: “Certain domain names are associated with more accidents than others.”
Even driver’s names can make a difference. Applying for cover as “John Smith”, for instance, resulted in a much lower quote than by using the name “Mohammed Ali”. Admiral and its sister companies Diamond, Bell and Elephant always quoted more if the driver was called Mohammed, The Sun reported.
Admiral brands were not alone, however. M&S Insurance also increased the price based on the name.
Admiral denied the claims, insisting that the firm’s anti-fraud software was designed to identify “where inaccurate details are entered or implausibly changed”, while M&S said it “did not discriminate” and would probe the claims.
The Financial Conduct Authority also vowed to look into the findings, even though back in 2016 the regulator decided not to launch a market probe on the use of big data by general insurers, claiming its use was “broadly positive”. It also said it could find no evidence that companies were withholding cover from high-risk customers.
In the same year, Facebook forced Admiral to pull the plug on a scheme – dubbed firstcarquote – which was designed to set the price of car insurance by analysing the behaviour of first-time drivers, following a privacy outcry.
Admiral planned to analyse the Facebook accounts of first-time car drivers or owners to look for personality traits linked to safe driving and monitor certain habits. These drivers could have been eligible for discounts of up to £350 a year.
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