Dec 4, 2012 2 min read

Privacy and Consent – pt5 – Time for a New Mindset?

Consent may at first sight seem a rather foreign term for the business world to spend time considering. That’s because it’s too often taken for granted. It is in fact fundamental to how markets work.

The central argument for market economics is based upon the moral legitimacy of consensual transactions. In other words, that we are free participants in markets, able to make choices as to how, when and whether we engage in those markets. This puts consent at the heart of the economic choices we make.

Consent is different from the four preceding privacy issues covered in recent blog posts (aggregation, secondary use, surveillance and identification). Those four issues dealt with maintaining the integrity of an individual’s personal data and concerns that can arise when it is challenged. Yet we all know that our personal data needs to be put to use in order for us to receive products and services. Consent is part of how we negotiate such use of our personal data.

Properly handled, consent allows us to engage with potential users of our personal data in ways that stop us from becoming unduly worried about some of the privacy concerns that previous blog posts touched upon. It’s a safety mechanism in that delicate balance between the privacy and utility of our personal data.

Consent is becoming the fulcrum issue around which two big trends affecting business are converging: the rise of big data and the regulation of personal data. We know that big data holds many benefits for society, but mishandled, can also create problems. To address such problems, the EU is currently in the middle of a reform of its data protection regulations. If such reforms go ahead as presently envisaged, one particular form of consent will become prominent: explicit consent.

There are a number of dimensions to consent (see the link below to a free ebook about this). Explicit consent is one of them and it can be an exacting one, as this definition indicates:

“Explicit consent: the consent given by one party to another based upon a clear understanding and appreciation of the facts and implications of an action, where the party giving consent does so voluntarily and in possession of all relevant facts.”

It’s an exacting standard to uphold for services like insurance, where one side knows a lot and the other side knows little. The individual has to not only understand how their personal data is to be processed, but appreciate the implications that could arise from it as well. That’s an awful lot to expect from a relationship with such information asymmetry.

Such asymmetry has traditionally been managed through the role of the professional, but as the traditional trust in professional standards has evolved into calls for greater transparency and accountability, consent is now taking on a more prominent role.

These trends will require business sectors like insurance to fashion a new form of information relationship with their customers. Part of the new mindset within which consent will sit could be the realisation that customers think less in terms of giving firms their personal data and more in terms of loaning it to them for a specific purpose, in return for something of specific value. Consent is part of how you negotiate those loan terms.

Another part of that new mindset will be the understanding that explicit consent can only be properly achieved within a relationship of trust. That’s what research into how doctors and patients handle explicit consent has found.

Building such new mindsets can be challenging for established sectors like insurance. Yet how businesses think about their customers is at the root of all successful firms, especially those who thrive in times of change.

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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