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Using data to price policies. One way to reduce risk is to control for as many variables as possible when underwriting policies, and that is where the New Car Assessment Program (NCAP) comes into play. (Photo: Shutterstock)

The potential of Big Data and analytics is creating a lot of excitement in the insurance industry. This is not surprising, given the most critical part of an insurer’s work — accurately assessing risk and pricing profitable policies accordingly — rests on the ability to analyze and identify trends within massive data sets such as credit scores, accident trends and climate models.

Events over the past year, however — GDPR, the California Consumer Privacy Act, Facebook’s Cambridge Analytica breach and more — have validated a growing public concern that Big Data and analytics can sometimes go too far. The drive to gather more and more information about individuals and their activities has resulted in a variety of privacy violations, intrusive marketing tactics and even, in some instances, unintentional bias.

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