Jun 29, 2023 5 min read

A Test Case on Data Ethics that Insurers Need to Watch

Location data is becoming positioned as a tangible example of how data ethics is to be addressed. A UK Gov. commission wants to boost public confidence in how location data is collected and used. Insurers need to monitor the commission’s work to understand policy makers expectations.

location data
The ethics of location data is turning into a meaty issue

The UK Government’s Geospatial Commission has published a report “Building Public Confidence in Location Data: the ABC of Ethical Use”. They propose three dimensions for the ethical use of location data:

  • Accountability - governing location data responsibly, with the appropriate oversight and security
  • Bias - considering and mitigating different types of bias, and highlighting the positive benefits of location data
  • Clarity - being clear about how location data will be used and the rights of individuals

So why have they done this? It’s because...

“Location data provides a useful window through which to consider data ethics. Its ubiquity makes it easier to ground a subject as complex as data ethics in tangible examples that support meaningful consultation... Our aim is to support the national conversation of data ethics through a location data lens.”

And they’re right. It’s clear from this recent article that data brokers see location data as crucial for drawing together disparate types of secondary data into some form of identify for each us. Its value is enhanced because location data can be both static (our house) and dynamic (where we drive). In other words, it anchors a wide range of other secondary data types.

Data brokers know this and so put in a lot of effort into collecting it, through mobile phone apps for example. They then sell it on in the ever booming market for good quality data. The problem however is that privacy (and particularly consent) is rarely respected. That’s why a lot of secondary data comes with privacy issues. And as a consequence, large scale users of secondary data (such as insurers) run the risk of having to delete it.

Strong Light on Powerful Lens

Bit of an overstatement perhaps? I don’t think so. If location data is to be a data ethics test case, then it’s a not unrealistic outcome in cases of significant over-exploitation of data. And that will be judged by the B in the GC’s ABC – in other words, bias. Link that with Citizens Advice’s ethnicity penalty campaign (and insurance as their test case) and what you have is a strong light being shone through a campaigning lens. As loss prevention people know, it’s an alignment that could generate a lot of heat.

What are the signs then? I think it’s early days, but one flag that could well be raised over the next twelve months or so is a Memorandum of Understanding being signed between the Geospatial Commission and the Information Commissioner’s Office. There’s not one yet, but watch this space.

Digital Resignation

How much momentum could the Geospatial Commission (GC) put behind this? After all, if a firm is complying with the law, then what’s the issue here? Well, the GC talk about location data sitting...

“...within a broad data landscape, which is governed by an existing framework of data laws. Good compliance with existing laws and principles is a base foundation for ethical use, but additional actions may be necessary to build public confidence and enable full value to be driven from the use of location data.”

They build on this by confirming that their quantitative research found that 86% of respondents do not want their location data to identify them. Other research backs this up. As the public feels their interests are being ignored, a sense of what the GC call ‘digital resignation’ towards the use and sharing of location data has crept in, creating a lack of trust around how that data is governed.

It looks very much like the GC will put this digital resignation at the heart of their work on location data ethics. They will push for firms to take steps to address it, while conducting regular surveys to see whether/how sentiment is changing. After all, the GC is a government organisation who have positioned location data ethics at the heart of their strategy. It doesn’t feel like an issue they’ll apply a light touch to.

The ABC Tension

What puzzles me however is their ABC approach. An ABC approach signals something rather simple, something easy to understand and apply. And as you can see from the three bullet points above, this GC’s ABC is pretty much just that. The problem is that while the GC report explains why these three themes are important, it falls very short on how it wants organisations to go about delivering on them.

The challenge of course comes in the next stage. Principles and guidelines are fine, but do they work? As I outlined in this recent article, a recent study found that most do not. That’s because ethical guidelines usually lack the mechanisms to reinforce their own claims. Without those mechanisms, those commitments remain just words.

Ethics Washing : Danger Ahead

What this creates is a significant risk of ‘ethics washing’. Here’s why (from the GC report)...

“Organisations could consider how they support the public benefit through appropriate sharing of and/or access to the location data they collect. In our public dialogue, participants expressed concern about the amount of profit a company may generate from using location data being disproportionate to the ‘amount’ of good or benefit to society from that use. By considering the public benefit, organisations could build the public’s confidence in the system of location data use, sharing and reuse”

Perhaps I’m being a bit of an old cynic, but I foresee a tension between what firms put forward as the public benefits from how they use location data, and the practices that consumers actually experience. Public relations people will strive to put a positive spin on what firms do, while the GC will find in its surveys that consumer sentiment remains negative. It’s the sort of situation that either deflates efforts around location data ethics, or explodes it around a significant case of misuse. To me, it feels like a situation that will have a ‘flip of the coin’ outcome.  

To Sum Up

We know from consumer research in both the UK and US that the public have clear views on what they find acceptable practice around the use of certain types of data. While insurers have to-date largely ‘soldiered on’ in their own way, they need to improve their radar on how the GC turns location data into a data ethics test case.

The legal people may see the situation as under control, but as the sector found with the loyalty penalty, insurers have much less control of such situations than they like to think. The combination of a discriminatory pricing campaign and a data ethics test case points to insurers needing to go through a step change in their understand of this complex and intertwining ethical landscape.

Two things to look out for: the GC entering into a MOU with the ICO, and further research into ongoing public sentiment. These could seriously disrupt that compliance / ethics boundary like never before.

Holding an internal workshop on location data? I can bring an independent voice to your discussions. Get in touch here.
Duncan Minty
Duncan Minty
Duncan has been researching and writing about ethics in insurance for over 20 years. As a Chartered Insurance Practitioner, he combines market knowledge with a strong and independent radar on ethics.
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