Spy in the bank

The Guardian Unlimited's Observer is carrying a story about how a UK bank has "found a way round" the UK's privacy law so that its insurance division can use customers' banking and credit information to determine insurability. The article isn't clear about the "way round", but does give an overview of how insurers use credit information to assess whether an individual is likely to present an insurance risk:

The Observer | Cash | Spy in the bank

"The general insurance division of one of Britain's biggest banks believes it has 'found a way round' the data Protection Act enabling it to use customers' banking details to underwrite insurance policies.

Barclays Insurance intends to 'score' potential customers according to their banking records. The insurer says those with poor scores - perhaps because they have missed bill payments or are constantly in the red - are more likely to make claims than richer customers with good banking records. Clients with very poor scores may be charged more or not be offered cover at all, enabling the insurer to offer cheaper premiums to richer clients with better scores.

Adrian Grace, the managing director, told Cash he thinks the company will be able to start using the customers' banking information as soon as September or October.

'Affluence underwriting', as insurance credit scoring is often called, is common in the US. One American insurer, Progressive Direct, says it has found credit history 'to be predictive of future accidents, which is why we, and most insurers, use this information to help develop more accurate rates'...."