Regulators are to investigate the insurance industry for potential racial bias and discrimination over the data that companies use to set their prices.
The Financial Conduct Authority (FCA) announced that while it had found no evidence of “direct discrimination,” insurers were using information within their pricing models that may implicitly or potentially explicitly relate to race or ethnicity, so there was a “risk of discriminating against consumers.”
Announcing a study of the £78 billion (US$99.6 billion) general insurance industry, which will look at whether certain groups of consumers are paying too much, the FCA also floated the idea of a specific day or week in the year when all consumers would renew or switch their insurance.
A report published by the regulator indicated that many loyal, older home insurance customers were being overcharged for their coverage so firms could offer artificially low prices to new customers.
Alongside the FCA’s program of work on general insurance pricing, it is working closely with the Competition and Markets Authority as it investigates the Citizens Advice super-complaint on excessive prices for disengaged customers.