Should Social Media profiling be used to determine Insurance Premiums?

Facebook Prevents Insurer from using Posts to influence Premiums

Today was supposed to be the launch of a pilot scheme by the insurer, Admiral, whereby they would ask to view the potential insured’s Facebook posts and then make a judgement as to the lifestyle and behaviour of the person and then offer a premium that was influenced by their judgement of that person.

Admiral had stated that it would analyse the accounts of first-time car owners, including what they were posting and things that they had “liked”. From this they would then build up a profile and determine whether they were likely to be safe drivers and offer discounts as a result.

Facebook has, at the last moment, pulled the plug on this. Probably because it realised that it could be embroiled in the considerable number of disputes and complaints that was sure to follow from such a subjective idea.

There are so many reasons why this crazy plan should not have got even this far. However, it does highlight the lengths insurers are prepared to go to in order to gain an edge in a market. Even if that market is as notoriously difficult to turn a profit from as young drivers.

My suspicion, having been around insurance companies for a while, is that some senior executives who wanted to appear hip, have ill advisedly listened to some trendy junior executives who have told them that the future is all about social media. In order to appear to be “on trend”, like your bachelor uncle who wants to take you to a Drake gig, said senior executives suspended their experience and, more importantly, common sense and ran with the idea.

While the pitfalls of this nonsense are pretty much self evident. It does invite closer thought. Long before social media was even a term, I was broking motor insurance. At that time, potential clients would either phone or drop in and complete a form from which a premium was calculated. But even then then problems would arise. It wasn’t common, but then again not that unusual for someone in the office to declare that they had some knowledge of the potential client that had not been declared. I have been told on more than one occasion that someone was not declaring their address properly, or not mentioning their part time evening job, in order to get a cheaper premium. How did they know? They lived next door to the person and knew they had moved months ago or saw them going to work every night!

Realistically speaking what actually is the difference between an insurer finding out “relevant” information from a third party as happened years ago and finding out such information from social media?

The point is that social media provides the type of information that all businesses will give their right arm for and whereas most people will resist attempts to give information if they think it will be used for marketing, most will be happy to volunteer such information, and a lot more, in a social media post.

Probably all young people are warned that potential  employers are likely to look at their social media profiles prior to being interviewed, and the more savvy ones will moderate what they post and who they let see it. The next level will be the use of social media profiling for commercial purposes, there is a good argument for saying that it is already here.

Perhaps Admiral’s biggest mistake was not trying to exploit social media, but just being too up front and honest about it. Even more of a mistake is the kind of information people are just thoughtlessly putting online for the world to see.

 

Further details of this news story can be found by clicking here and more information about car insurance and the use of Black Boxes here