GI pricing thematic review: involvement of actuaries in pricing of UK home and motor insurance
The UK home and motor insurance market has received a high level of regulatory focus in recent years, following growing concerns among consumer groups and regulators – particularly in relation to the issue of ‘dual pricing. Although the level of involvement differs across organisations, actuaries continue to play a key role in personal lines pricing. In this thematic review, we examine the role and influence of actuaries in this important area of work.
Our review has benefited from constructive engagement with a range of industry participants, as well as input from IFoA volunteers practicing in this area. This has provided a range of contexts in which to consider both the current position of actuarial involvement in this area and the standards and education in place to help members.
The findings of the review, endorsed by the IFoA Regulatory Board, are centered on two key elements, both 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 this with the commercial and innovation drivers important in pricing
- Ensuring that advances in data science and machine learning modelling are adequately covered by standards, guidance, and education
GI pricing thematic review webinar
The IFoA held a webinar to provide members with an opportunity to learn more about the review findings. A recording of the webinar is available to members on the IFoA's Virtual Learning Environment (VLE).
Alan Marshall, IFoA Review Actuary, said: “The UK home and motor insurance market has been through a challenging period in relation to pricing practices. The recent FCA pricing practices policy statement provides an opportunity for the industry to move forward, and actuaries in this field will be a key part of this. We hope that our findings encourage members to promote a balance of customer fairness and commercial considerations, and that actuaries can continue to drive forward data science and machine learning innovation in this domain alongside other professionals.”
Alan Marshall, IFoA Review Actuary, said: “The UK home and motor insurance market has been through a challenging period in relation to pricing practices. The recent FCA pricing practices policy statement provides an opportunity for the industry to move forward, and actuaries in this field will be a key part of this. We hope that our findings encourage members to promote a balance of customer fairness and commercial considerations, and that actuaries can continue to drive forward data science and machine learning innovation in this domain alongside other professionals.”Events calendar
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