Rahul Matthan: Data-rich insurance models could fail beyond a point

Insurance is a human innovation that ensures that in moments of crisis, no one individual has to bear the weight of misfortune alone. Pooling risk has allowed us to contract, innovate and prosper, but with the ubiquitous availability of granular data, that assurance is starting to be replaced by something colder and more precise. In 2024, after India’s Insurance Regulatory and Development Authority approved telematics-based policies, insurers began using black-box devices to collect real-time driving data to assess people’s behaviour behind the steering wheel. Granular data allows us to price risk more accurately, while offering incentives for less risky behaviour. This will require us to establish clear boundaries on how insurers can use data and ensure that risk pricing doesn’t turn into some sort of punitive system for undesirable activities.