The U.S. arm of British insurer Aviva recently looked at 60,000 recent life insurance applicants to determine if they were suitable risks. The traditional way in which it would have assessed and then underwrote these people was through a series of medical tests and a questionnaire. With this group of people, though, the company tried something different, according to the Wall Street Journal: examined online data it found about the applicants, from shopping details, catalog purchases, magazine subscriptions, leisure activities and information from social-networking sites.
The point was, could it make the same risk assessments about the applications from that predictive data as they could from their bodily fluids? The answer appears to be yes, according to the Journal, although clearly tweaks need to be made to the model. AIG, for instance, is looking at the same model with an eye to better refining what is meaningful and what is not.
Regulations on the Horizon
As such uses of consumers data proliferate - that is, outside of the advertising industry by such companies as health and life insurers, debt collection agencies and even plaintiffs attorneys - there is a good chance that Congress or state regulators will step in to tighten what is being gathered. As it is, Congress is set to hold hearings on Do Not Track regulations next month.
The Commerce Department is also readying a paper on online privacy.
Insurers, it must be said, are not the only ones - or the only example of industries outside of the ad community gravitating to this treasure trove of data. "It is an important tool," said Marc Davenport, president of RMI Consulting, a Houston commercial debt collection firm. "We do it because information is power." (via the Houston Chronicle).
Health insurers as well have been eyeing Twitter and Facebook for data about their insureds, according to a recent post by Jeremiah Owyang. In short, he wrote, we can expect insurance and wellness companies to monitor social data, then reward - and penalize member actions. He suggested a few hypothetical scenarios: Insurance companies, for example, monitor what members are saying, then offer suggestions on wellness, activities, and being healthy. "Overtime, they can develop intelligence and eventually predictive models based upon members published information and their overall well being." From there companies will be able to size up new members based upon their existing social behaviors online - and use that as part of the decision in what packages and rates are offered. More ominously, Owyang wrote, insurance companies could monitor customers - and make underwriting decisions based on their behavior. For instance, checking into bars four times a week could yield a 10% increase in a premium. Pictures posted or texts sent while clearly driving would translate into an increase in car insurance.
In the Courtroom
Social media data is increasingly finding its way into the courtroom, Misha Kerr, an intellectual property attorney with the law firm of Arnstein & Lehr, told TechNewsWorld. "What you think is a private page is not private, and you never know who has access to it," Kerr said. Indeed, divorce lawyers have been made very happy by the explosion of Twitter and Facebook data as they can be gold evidentiary mines. Time magazine reports. "Did your husband's new girlfriend Twitter about getting a piece of jewelry? The court might regard that as marital assets being disbursed to a third party. Did your wife tell the court she's incapable of getting a job? Then your lawyer should ask why she's pursuing job interviews through LinkedIn."
Fair Credit Reporting Act
It is the insurers encroachment into this space, though, that is most likely to prompt a regulatory response. Using it in the life-insurance application process would "raise questions" about whether the data would be subject to the federal Fair Credit Reporting Act, says Rebecca Kuehn of the Federal Trade Commission's division of privacy and identity protection via the Journal. When an "adverse action" is taken against a person, such as a decision to deny insurance or increase rates, those regulations would automatically kick in, she explained.
http://www.marketingvox.com/regulation-could-step-up-as-insurers-tap-consumers-online-data-048138/
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Aviva’s new computer system/method of assessing insurance claims is causing stirs as predicted, including the calls for regulation as I predicted on Friday. I was actually right for a change, I’m going to dine out on this all month now! Anyways, this one is going to run for awhile and it bears keeping a close eye on, that’s a certainty.
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