New York is the first state to legalize the monitoring of social media by insurance companies. What does this mean to your bottom line?
Put simply, what you post on social media will cost you money in terms of your life insurance, health insurance and even auto premiums. Insurance companies need to save money, therefore they will use your lifestyle against you, that is if you make it public.
New York’s Department of Financial Services (NYFS) has
released new guidelines
that will allow life insurance companies to use data from customers’ social media posts to determine their premiums, and experts say that these rules could
potentially extend beyond New York’s borders.
The new guidelines suggest that companies can use data from other “non-traditional” sources as well, though insurers will have to prove the information
Does not unfairly discriminate against protected groups:
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An insurer should not use an external data source, algorithm or predictive model for underwriting or rating purposes unless the insurer can establish that
the data source does not use and is not based in any way on race, color, creed, national origin, status as a victim of domestic violence, past lawful travel,
or sexual orientation in any manner, or any other protected class.
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The NYFS press release states that
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…insurers’ use of external data sources has the potential to benefit insurers and consumers alike by simplifying and expediting life insurance sales
and underwriting processes. External data sources also have the potential to result in more accurate underwriting and pricing of life insurance.
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The use of social media by insurance companies has been a topic of debate for years now, although there’s very little legal guidance about what privacy
rights we have when posting online. Maria T. Vullo, the chief of the NYFS has been trying to get ahead of the inevitable by establishing some ground rules
after an 18-month investigation which collected information from 160 life insurers about their practices.
She
told the Wall Street Journal
last week:
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Because this is a rapidly evolving area in insurance underwriting, it was important for the department to create general principles now.
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According to an inside source
from New York’s investigation, only one of the 160 companies polled currently uses social media data, but that company was not identified.
In 2012, the National Association of Insurance Commissioners released a
white paper
from their Social Media Working Group which mostly addressed the ways in which insurance companies could use social media in their marketing, but acknowledged
that it was already being used to monitor customers:
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Companies are using social media in forensic data mining to discover workers’ compensation fraud. For example, some companies monitor social media sites
that might contain posts negating the claims of allegedly injured workers who are participating in activities that are beyond the restrictions placed by
the treating physician.
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Some background:
Traditionally, life insurance companies used physical exams and questionnaires to determine a customer’s rates. But as this is costly and time-consuming,
companies began to engage in predictive modeling
to determine how likely it was for a potential customer to develop a disease or engage in dangerous activities and used data collected from many public
sources (think medical records of injuries, accident claims, even parking tickets). This new method of data collection is an extension of this, but into
a realm we often (and mistakenly) treat as private.
Companies already had access to general social media trends (common phrases or hashtags, viral content, etc.) to help them understand their customers,
but this was largely for marketing and customer service, so it’s hard to make the case that that violated privacy in the way that this new, more personalized,
surveillance would.
A New York court decision in 2010 (
McCann v. Harleysville Insurance Co.)
declared that an insurance company could not conduct “a fishing expedition” into someone’s Facebook account “based on the mere hope of finding relevant
evidence,” but clearly insurers are finding workarounds. At the very least, it appears that the Fair Credit Reporting Act might give customers who are
denied insurance the right to know whether the decision was based on information gleaned from a social media profile. This could provide material for lawsuits
that could clarify the boundaries for everyone.
The danger and power of algorithms:
The new ground rules also warn life insurers using non-traditional data that they are responsible for analyzing their algorithms to be sure they are free
of bias against protected groups. This means that they can’t simply shop for algorithmic software and employ it without thorough testing first.
Of course, there are multiple issues here, despite the agency’s best efforts to try to make the process unbiased. First, we know that companies have often
refused to share details of their algorithms
with customers and the law has allowed them to do so. We often don’t know how they are processing data, so all we can do is continue to test them. But
we also don’t know how much testing it takes to determine if an algorithm is unbiased, and there’s no objective mechanism or yardstick that allows a company
to truly confirm a lack of bias.
Second, while there are plenty of great data scientists and ethicists working together to find ways to make algorithms less biased, we simply don’t know
how to do it yet. Humans write algorithms and all of us have biases of some sort. The more we claim we don’t have them, the more deeply entrenched they
likely are, making it even more difficult to ferret them out. This has been
a disaster already
in employment decisions and court sentencing decisions that employ these algorithms. But we continue to think that data is objective and can yield some
sort of truth about the world.
Third, it will be very difficult for customers who are not well-versed in algorithmic bias to fight against unfair decisions made about their life insurance
premiums based on data they don’t even realize they’re giving away. We’ve been bombarded with stories about privacy violations, especially from social
media giants like Facebook, over the last year and instead of seeing people take steps to protect themselves,
Facebook has only seen more new customers and increased profits.
At the end of the day, a surprising number of people are
perfectly willing to hand over their data
to life insurance companies for as little as a gift card or a
discount on an Apple Watch.
And if you think you’re safe because you don’t have a social media profile, think again. Recent research has shown that
information about a person can be constructed from the comments of as few as 8 of their friends.
You are what you post, but apparently, you are what your friends and family post as well. This doesn’t appear to be a tactic insurance companies are looking
into yet, but it’s important to keep in mind as they expand their methods of surveillance.
It’s also important to note that social media posts can be deeply misleading, even to a deep learning algorithm assigned to seek out, process, and judge
the value of photos that customers post online. If you’ve given up smoking but have old photos with cigarette in hand (or repost one of those popular Facebook
Memories) how can a computer (or even an underwriter with a lot of work to do) properly assess the context of a photo? How do you control what other people
post about you online?
While Photoshopped images and even deepfakes could eventually become a problem for those looking to sabotage customers, that’s likely a problem that lies
farther down the line. But that’s not to say we shouldn’t keep it in mind.
There are some more likely scenarios that it’s worth watching out for (and, to be fair, some scenarios that are worth avoiding altogether). The U.S. Insurance
Agent’s blog, which aims to help customers compare plans and provides commentary on the industry
has shared some possibilities
for ways in which customers might harm their chances of getting not just life in insurance, but home and renters insurance, and keeping their premiums
down. It’s unclear whether or not companies would go this far, but some possibilities include posting photos or updates while driving, posting about an
unregistered pet that is classified as a “bully breed,” leaving on your geotagging when you’re on vacation and thus signaling to thieves that your house
is vacant. These are things we rarely think about when posting online.
So what can we do?
Plenty of people will join the chorus of protests against this invasion of privacy, but it could also be the case that New York is doing us a favor by
putting something on the record that can be challenged. No states have any rules right now governing how life insurers can populate their algorithms. We
know they currently use public records such as homeownership data, credit information, educational attainment, civil judgments, licensures and other public
filings, and even internet use. But now that they’ve taken an extra step – and one that will appropriately freak people out – the legal system can move
into action. Yes, it will take unfair decisions and lawsuits, and time, and money, but that’s how the system currently works.
While we wait to see how this all shakes out, customers should be sure to read the fine print on their insurance policies and ask specific questions about
what companies will access in order to determine their rates. Companies should be as transparent as possible about how they collect data and state that
on their websites in easy-to-understand terms so that customers can make informed decisions about whether they want to apply for a policy with a specific
company. The new guidelines do mention the need for transparency:
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Where an insurer is using external data sources or predictive models, the reason or reasons for any declination, limitation, rate differential or other
adverse underwriting decision provided to the insured or potential insured should include details about all information upon which the insurer based such
decision, including the specific source of the information upon which the insurer based its adverse underwriting decision.
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And while data breaches and hacks can’t protect even data you’ve marked private, it does make sense for social media users to explore the privacy settings
on their accounts. It will be harder for an insurance company to defend their use of data if it has been stolen and trafficked on the Dark Web.
In the meantime, make your profiles private, revisit your friends’ list and privacy settings for individual posts, turn off location services and geotagging,
delete compromising photos, do not allow other people to tag you on social media without your permission, and most importantly, do not engage in dangerous
behavior like texting and posting while driving, and always be honest with your insurance company about your habits and health.
Of course, it’s in the best financial interests of honest customers and insurance companies to prevent insurance fraud, which appears to be the main reason
a company would check a social media profile right now.
To know more: Contact ABCO technology