Treasury financial secretary Mark Hoban has warned that new risk modelling techniques could leave some demographic groups unable to afford insurance.
In a speech to the Insurance Institute in London this week, Hoban (pictured) welcomed developments in risk modelling technology which enable better risk pricing and customer differentiation but warned it could price some people out of the market.
He said: “It could cause more segmentation in the market, reduce the tolerance for risk sharing and potentially cause a shift, with some consumers being priced out of the market altogether, leaving them completely uninsured.”
Worldwide Financial Planning IFA Nick McBreen says: “Firms make their money insuring healthy people who take no risks, so, as this technology improves, firms will use it to make smarter commercial decisions about who to insure. It will be the physically vulnerable and those who need it most who are excluded.”
Hoban also told delegates that insurance regulation will not play second fiddle to regulating the banks.
From 2013, micro-prudential supervision of insurers will be the role of the Prudential Regulation Authority.
Hoban said the Government recognises the differences between insurers and banks, adding: “Insurance regulation will not take a back seat to deposit-taker regulation.”