Something unusual happened yesterday. Admiral, the car insurer, issued a press release stating that it would begin to use Facebook posts, with customers’ permission, to determine premiums and bring down the cost of car insurance premiums for some young drivers, for whom it is notoriously pricey.
Then, late in the day, Good With Money understands it decided not to go ahead with the pilot after all.
Although some news outlets still ran it this morning, so perhaps it wanted to test the water and found the water was a bit too cold. Or perhaps it has to go ahead now as the news is out. At the time of publication, it hadn’t come back to us.
Either way, the ethics of using what is called “big data” – everything that can be gleaned about a person using all the information they can gather about them from publicly available sources, for whatever purpose, even if that purpose is apparently to benefit the individual with lower insurance premiums, is thorny, to put it mildly.
According to Reuters, many big insurance groups are working out ways they can use this information to deliver better risk analysis. In the US, Swiss Re is apparently involved in developing technology that analyses “sentiment” of social media, on the basis that if you are a positive person, your twitter profile will demonstrate this and you may be eligible for cheaper health or life insurance.
Do not be fooled by the promise of cheaper premiums, discounts or whatever people say is in it for you. Yes, sometimes there may be a few benefits. But at what cost for all of us?
Insurers are interested in social media profiles to reduce their losses, not your costs.
Admiral says premiums would only ever go down. But insurance is a zero sum game. That means that while those who would have given the insurer permission might have seen a fall if their Facebook profiles weren’t too wild, those that did not give permission or did not have Facebook profiles would have been penalised by default. They wouldn’t have seen their premiums rise directly, but over time, would end up with higher quotes than their more open counterparts.
Where we are now is: there are a bunch of insurers standing around a big red button that says: “Social media profile use is ok”. Everyone wants to press it but no one wants to be the first, as the apparent Admiral back track shows.
There are clearly many, many implications for this and I feel like Jeff Goldblum early on in the first Jurassic Park when he says: “they were so busy thinking about whether they could that no one stopped to think about whether they should”, or something like that.
The Association of British Insurers (ABI) is keen to play the implications down, saying it is impossible to speculate what might happen as a result of this type of initiative, but says insurers don’t “routinely” look at profiles and don’t have armies of technicians snooping through social media. It insisted generally that insurers would of course use this data according to privacy regs, etc.
Of course, there is an argument that any company already has access to whatever you make publicly available via your social media. If you make it publicly available, what right do you have to mind?
But clearly, people do not sign up to Facebook or Twitter thinking their data is going to be used in this way, and this is arguably the biggest thorn of all. The original purpose of social media is to communicate with people you know. It looks like we are in danger of losing this.
Admiral said it would ask permission. It would have to, because of data protection laws. But data protection ethics also recommend that providers ask for “informed consent” and I would argue that this is where the Admiral proposition falls down.
The insurer did not tell us in the press release how it would rate, say, a post showing you holding two glasses of wine on a Saturday night, or a pic of you and your car outside a café in France. Would actuaries deem these within an acceptable range of social activity to still claim a lower premium? How many posts showing you blotto-ed are too many? How many posts showing you at home cuddling your cat on a Friday night are enough? Would political activism count against you (sorry Avaaz petitions)? And would you get a right to reply, if, say, one of your lovely friends posted a picture of you from 5 years ago tied to a lamp post that an insurer saw and promptly jacked up your renewal quote by 20%?
A rational response among social media posters, if this became common practice among insurers, could be that they begin to use Facebook and the rest in a more circumspect manner, aware that certain posts might make them look bad and cost them more.
It is not a huge mental leap to imagine that if using social media to determine premiums becomes normal, that those without Facebook and twitter profiles could end up being refused products because insurers consider that they do not have enough information on them, in the same way that those without credit histories struggle to get credit now.
There’s lots to say about the commercialisation of Facebook generally (people! Why do you keep liking banks??), but the incursion by insurers, where value judgments would be made by actuaries about how you live your life based on (let’s be honest) the utter crap many of us post, is the most insidious example yet.
The ABI say the insurance industry debates this all the time. Admiral was the first to stick it’s head above the parapet before quickly yanking it back down. But with so much technology just begging for a large financial services company to buy it, it’s a question of when, not if. The debate is not just one for the industry, it is one we all need to be involved in.
But as Anna Laycock, of the Finance Innovation Lab asked at a conference last week, with so much innovation going on in the sphere of social media analysis, behind closed doors: “Why are we not having this debate already?” There’s a danger we get a bit blase about what info. people can find out about us, assuming there is so much it almost becomes meaningless.
This relaxed attitude to personal information is what big companies are banking on. The value of your data is in the eye of the beholder – and it depends what the beholder is looking for.
This is YOUR data. It is immensely valuable. You don’t even know how valuable. But you might be about to find out – and it could change the benign way you view and use social media forever.