Introduction to Data-Driven Tools
Insurance companies are integrating data-driven tools like centralized data lakes and data marts to enhance data quality and implement rigorous governance frameworks. These advances aim to ensure that data users across various business functions maintain high-quality data and provide feedback for continuous improvement.
Addressing Data Accuracy, Fairness, and Transparency
Several insurance firms have implemented comprehensive governance arrangements to tackle data accuracy, fairness, and transparency issues introduced by BDA. Before deployment, new models, especially those involving machine learning (ML) algorithms, undergo thorough training, testing, and review by multiple departments to prevent bias and ensure reliability.
Mathematical Calibration and Validation
The insurance sector emphasizes the need for mathematical calibration and validation of BDA models. Regulatory frameworks like Solvency II mandate the involvement of critical functions (audit, actuarial, compliance, and risk management) in providing multiple lines of defence against potential issues arising from BDA.
Compliance with GDPR
Insurance firms comply stringently with GDPR requirements, appointing Data Protection Officers, conducting Data Privacy Impact Assessments (DPIAs), and adhering to data minimization and accountability principles. These measures ensure the lawful collection, sharing, and use of data.
Ensuring Accuracy of Data Inputs and Outputs
Participating firms revealed robust governance processes to maintain data accuracy. They often avoid external datasets of questionable quality. They prefer trusted sources and sometimes limit BDA to internal data. Companies also ensure that BDA tools avoid black-box algorithms or ensure human oversight to maintain transparency and fairness in outcomes.
Ethical and Fair BDA Practices
Companies assert that their BDA practices comply with existing legislation, ensuring that no discriminatory or sensitive data variables are used. Some firms adopt internal governance tools like codes of conduct and data privacy advisory panels to uphold ethical standards.
Consumer Information and Transparency
Insurance firms inform consumers about the types, sources, and purposes of data used in BDA, in line with GDPR requirements. They also elucidate consumers’ rights concerning personal data, often through detailed terms and conditions or privacy notices accessible on their websites. Some firms also voluntarily disclose rating factors used in BDA to aid informed consumer decisions, while others adhere to jurisdictional mandates for such disclosures.
Resource
EIOPA Survey – Data Governance
