Life Insurance Companies Are Using Your Social Media Data When Underwriting
The state of New York has recently implemented new guidelines that will allow life insurance companies to use social media and other online data about consumers when underwriting for a policy or establishing premiums.
While it has always been legal for insurance companies to use this kind of public information, new advances in technology making it easier than ever to access social feeds of prospective customers. It makes it simpler for insurance companies looking to make well-informed decisions about an applicant find real, verifiable information. If someone marks down that they haven’t left the country recently, or are not partaking in extreme activities like racing or skydiving, but their Facebook and Instagram feeds show pictures of them travelling the world and jumping from airplanes, it may make the insurance company think twice during the underwriting process.
New York is clearly preparing for a future where social media and online data becomes as useful as credit scores or criminal background checks. Up until now, most insurance companies only have checked the social media accounts of a person suspected of fraud, but the ability to process an immense amount of data on an individual, verifying or rejecting the information someone has put on their insurance application, is in reach of all major insurance companies.
There are decidedly pros and cons to this new technology when it comes to its use in this manner. Consumers will likely worry about how their online information is being used, and lawmakers need to concern themselves with how using the information could conflict with anti-discrimination laws that protect people from being turned down based on race, faith, or sexual orientation. Right now, it is solely on the insurer to make sure that they are not making rulings on policy applications based on items that might otherwise cross over into laws currently governing discrimination, which is a gray line an unscrupulous broker might easily cross.
The other concern is the accuracy of data retrieved. Someone could be a non-smoker, but they’re employed at a local cigar shop; another might be a waitress or bartender, and their data shows them out at the bar 5 nights a week. While you’d imagine that this information might be cleared up with a quick verification, a mass collection of data like insurers are able to retrieve means small details may go unnoticed, and rejections handed out as swiftly as new policies.
The pros, of course, lean more in favor of the insurer, making it quicker and easier to issue policies, a positive for any company. It will make it substantially harder for those lying on their applications to get away with it – if someone is saying they do not drink or smoke, but their Facebook timeline shows otherwise, it’s a quick rejection on the part of the insurance company.
While transparency is always the best policy, you will soon find that the public will begin to question more and more how their data is used, in what manner, and how private should they be online. New York may be the first state to begin creating official regulation, but the rest of the country is only a small step behind.