People row their boat on the old Windsor Bridge under rising flood water along the Hawkesbury River in the Sydney suburb of Windsor on March 9, 2022.
Saeed Khan / AFP via Getty Images
The Actuaries Institute warns insurers’ use of big data in Australia could leave homeowners living in areas at risk of being overvalued outside of the insurance market.
Warnings are in place as parts of New South Wales and Queensland continue facing big floodsresulting in 21 deaths and billions of dollars in property damage to date.
The benefits of leveraging data from smart devices, aerial imagery and raw text input have enabled the insurance industry to uncover the extent of dispersion, said Institute of Actuaries CEO Elayne Grace. greater risk, leading to more accurate risk estimates. While this benefits insurers and low-risk customers, it also results in greater premium coverage resulting in coverage for homeowners living in high-risk areas. Floods and wildfires become more expensive.
“Some consumers are excluded from insurance: There will be more and more customers for whom insurance becomes less affordable and, as a result, they either don’t cover or don’t cover at all. If the risk exceeds Over-risking by all insurers, Grace said at a conference on the digital economy led by the Reserve Bank of Australia and the Australian Bureau of Statistics, there will be no more insurance.
The Institute of Actuaries also warns that the increasing use of big data for insurance could lead to a range of extreme outcomes, known as “a vicious cycle”, in which the insurance pool becomes smaller, underperforming. more diversified and higher risk, leading to higher premiums for remaining customers.
The Australian Government can have a role to play when competitive insurance markets fail to provide suitable coverage at affordable prices, particularly in situations where potential risks are beyond the reasonable control of consumers. and insurance is essential. To highlight this concern, the government has recommended that it establish an expert group to discuss and develop a broad set of principles for consumer protection.
On Wednesday, Productivity Commissioner Catherine de Fontenay said at the same conference that the measurable benefit behind cloud adoption in Australia is still not clearexcept in the case of a company operating in regional and remote areas of Australia.
This pattern was found as part of a study conducted by the Productivity Commission on whether cloud technology is associated with higher company revenue per worker and higher wages per worker. are not.
Outside of this stereotype, however, de Fontenay says there is currently no correlation between a well-run company and using cloud services when looking at data on revenue per employee and average salary. averages of companies.
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