All insurance policies have depended upon criteria like medical assessments and employment status to determine an individual’s risk level. The higher the risk, the higher the insurance premium. But with advancements in technology, additional data is now available for underwriting and claims processing.
Social media has penetrated almost every aspect of our lives. A majority of us have at least one social media account and we regularly share updates on our profiles for our connections to see. But beyond posting the perfect shot of our breakfast, can social media actually be a tool for insurance companies to evaluate an individual and determine their insurance premium?
The use of social media posts as credible research sources is a legal method in insurance processes. Shouldn’t, social media scoring be a part of your agent’s routine background assessment process or in claims processing?
Social media scoring cannot be the only form of risk evaluation, but it could definitely be one of the information sources of an individual’s eligibility. Risky behavior like excessive drinking and smoking can easily be spotted on social media. Traditional risk evaluation might take much longer to uncover these practices. In many cases, with conventional methods, a lot of risk factors can actually go unnoticed. This affects the accuracy of the final insurance premium estimate. Social media checks are also less expensive to conduct since they only require the underwriter to do a quick scroll-through of the applicant’s feed.
The first documented case of social media in claim processing was in 2013, in Astoria. The police were investigating the damage to two cars that had been side-swiped at night. Finding the person responsible would have been impossible if Jacob Cox-Brown had not put a status update “Drivin drunk… classic but to whoever’s vehicle I hit I am sorry. :P”. When police matched the damage to his car, he was arrested, and insurance cleared the claim for both car owners. This incident threw into the limelight, for insurers, the importance of not ignoring social media.
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Evaluating an applicant’s eligibility through social media requires insurance underwriters to dig deeper into the meaning behind seemingly innocuous posts. For example, we wouldn’t think twice about a person posting their weekend parties on social media, but for an insurance carrier, frequent posts of this kind could suggest alcoholic behavior. If such an individual was applying for P &C insurance, it could affect their premiums. The same goes for posts about adrenaline-pumping activities like race car driving, skydiving, bungee jumping, and so on. Agents can also lookup a person’s family background on their social media. If they post about their parents being sick with a hereditary disease like type 2 diabetes or breast cancer, the agent can assume the individual is also at risk for developing these conditions. This would again potentially raise their health insurance premiums.
Oversharing on social media can also be a red flag for insurance carriers. Is the individual putting up a lot of pictures of their house layout or personal security details when they’re going on vacation? This might make them a potential target of theft, which could increase their property insurance premiums.
While social media can be a powerful tool for assessments, there have been many concerns raised over the legitimacy of social posts as credible research sources. Do insurers have the right to look at an applicant’s social media? And can they use information accessed from it to raise premiums or withhold approvals?
In purely legal terms, they can. Any information that an individual posts online and makes public belongs within the public domain. When creating a social media account, users agree to the terms and conditions of the platform. Unless the user changes the privacy settings of a post, anyone who can access it has the right to use it. The one thing that a claim adjuster or investigator clearly cannot do is try to follow or friend the individual on those platforms in order to obtain information. If they do this, it could be considered a legal violation or a form of entrapment and would result in serious consequences for the insurer.
The one thing that agents very clearly cannot do is try to follow or friend the individual on those platforms in order to obtain information.
An individual’s social media feed is largely viewed as a personal space to share updates with close friends and family. When these posts are used as information sources for professional purposes, they can naturally raise apprehensions over privacy intrusions. One of the main questions is about the validity of information on social media. For instance, a customer could be visiting bars regularly with friends without actually drinking too much themselves. Without knowing this, algorithms could automatically mark them as high-risk.
Bias is an important concern when it comes to any form of customer evaluation and social media profiling is no exception. Human agents with an unconscious bias based on gender, race, or other factors might only pay attention to those aspects of a social media account that confirm their bias. This could lead to an unfair evaluation of eligibility. Since social media profiling tends to be more qualitative and subjective than those based on pure data, the opportunity for bias to creep in is far greater.
The third important concern over social media scoring is the validity of old posts. An individual may have lived a high-risk lifestyle 10 years ago but does that still make them an unsuitable candidate for insurance in the present? Unfortunately, old social media posts can often outlive the beliefs and behaviors portrayed in them, which could lead to unfair scoring. Emerging technologies like machine learning and predictive analytics are helping in applying better accuracy in social media scoring. These technologies are making the connection easier between the physical and digital world through data.
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Social media scoring is far from a perfect system, but it does have several benefits when used correctly. With the proliferation of social media, it’s also becoming more common for insurance carriers to use social media profiling as a means of assessment. Almost 25% of 25-34-year-olds have found that their social media has affected their loans and premiums. The onus, at the end of the day, lies on insurers to ensure that social media checks are merely information sources that are supplementary to the overall assessment process and not the only form of evaluation.