Insurers and big data

Insurance companies are increasingly using “big data” to optimize all aspects of their businesses—from claims processing and marketing to underwriting and pricing. Recognizing this trend among insurers, the National Association of Insurance Commissioners (NAIC) recently formed the Big Data (D) Working Group (Working Group), which met for the first time at the NAIC meeting in New Orleans on April 3, 2016. The NAIC has charged the Working Group to explore potential opportunities for regulatory use of big data to improve efficiency and effectiveness of market regulation. Insurance regulators are looking to understand how the insurance industry is using big data, as well as the positive and negative impacts on consumers.

While the use of large datasets by the insurance industry in underwriting and pricing is not necessarily new to the insurance industry, due largely to advances in technology, the amount of data that insurers have been able to obtain about customers and risks has vastly increased over the past decade. The insurance industry does not have a uniform definition of what constitutes “big data”; industry trade associations, such as the American Insurance Association (AIA), are encouraging regulators to carefully consider any definition they might use, as every insurer does not necessarily use big data in the same way. The AIA is also discouraging regulators from categorizing the concept of big data as automatically suspect.

Some regulators have concerns regarding the accuracy of the data being obtained by insurance companies. Industry trade associations, however, believe that the goals in using big data, which they believe are ultimately positive for the consumer and include facilitating greater pricing accuracy and developing more effective and efficient methods for loss prevention, will encourage companies to strive to obtain more accurate data to edge out the competition.

Another issue of concern to regulators and consumers is the protection of personal information in the collection of big data. Regulators are also concerned with the lack of transparency as to the use of big data by insurers, as regulators generally do not have access to most of the new data being used by insurers for all aspects of the insurers’ business. The Working Group will examine these issues; however, while the activities of the Working Group should be monitored closely, any pronouncements or guidelines coming out of the Working Group will likely not occur in the near future.

Regardless of the positive or negative effects of the use of big data by insurers, it is clear that regulators will be focusing on this topic for some time to come. Any decisions made regarding the use of big data could have major impacts on how insurance companies operate. More information regarding the Working Group and its charge and objective can be found on the NAIC website at Materials presented at the Working Group session of the Spring NAIC meeting can be found here


Noteworthy links from the past two weeks



  • Questions were raised about the effectiveness of the international designation of MetLife as a Global Systemically Important Insurer after a federal judge overturned the US designation of MetLife as a Systemically Important Financial Institution at the national level []

  • 60 Minutes covered the investigation of unclaimed life insurance benefits over the last several years []


  • UnitedHealthcare announced it would exit the Affordable Care Act health insurance exchanges in at least 22 states [Bloomberg, Kaiser Health News, The New York Times]
  • Insurers warned that without significant rate increases participation in Affordable Care Act exchanges is unsustainable [The Hill]
  • Arkansas Governor Hutchinson vetoed a legislative effort that would have ended the state's participation in Affordable Care Act Medicaid expansion [Arkansas News]
  • The New York Department of Financial Services issued guidance telling health insurers that they must cover maternal depression screening [New York Department of Financial Services]
  • The New York Department of Financial Services filed court papers for the liquidation of Health Republic, New York's Affordable Care Act CO-OP [New York Department of Financial Services]


  • Vermont's Governor signed new captive insurance bill into law [Insurance Journal]
  • The US House of Representatives was expected to pass a flood insurance reform bill [The Hill]


  • The International Association of Insurance Commissioners asked for comment on its draft issues paper on cyber risk [Lexology]