Can your status update change the amount of money you pay for your home or car insurance? Not yet, but I think that’s where the industry’s going in the near future. Modern technologies and resulting behaviours are impacting your risk profile so don’t be surprised if you’ll have to provide your Twitter login when you get an insurance quote in a few years time.
Take the recent study by UK insurer Legal & General which found that burglars are finding targets by searching social media sites to see a potential target’s whereabouts. The obvious way to do this is simply by searching someone’s Twitter updates to see if they’re heading out of the house or going away on holidays. A bit more Googling later and you can pretty much find all the other information you need to locate that person’s house and break in while they’re away. In other cases, the user doesn’t even need to say they’re leaving the house if they have GPS enabled on Twitter. Twitter will then automatically update your exact location with every Tweet you send from your phone. If you’re making it easy for a burglar to track your whereabouts, why should you not get penalized for that with a higher home insurance premium?
In the case of car insurance, the GPS locator as well as text of one’s Tweets could impact not only your risk evaluation but your claims process. For example, SMS-ing or using your phone is illegal in many places. If there is evidence of someone sending a Tweet (which, remember, is location stamped) while they’re supposed to be driving, then should this person not be punished with a higher premium? A recent study found that texting while driving increases crash risk 23-fold. I’m sure the same applies to posting on Twitter or Facebook while driving.
How about if someone gets into an accident and tweets something like “I just crashed into another car. Crap.” and then try to tell their insurer the accident was not their fault, should their Tweet not be used against them?
Health or life insurance premiums can also be affected by our online behaviour. Many people are using online help and support programs to lose weight or quit smoking. Both factors are quite important in health and life insurance. There’s an opportunity for health and life insurance companies to monitor their customers’ health by partnering with those websites. They could reduce premiums if they see their customers meeting their weight loss goals, for example.
Or what about pet insurance? Why not partner with major online pet pharmacies to track whether owners are filling their pets’ heartworm prescriptions regularly, or buying healthy dog food.
Travel insurers could match their premiums to the airline safety record that the passenger is taking, the crime rate of the area where their hotel is located and even the baggage replacement policy of the airline. The “safer” your trip, the less you would pay.
As we become more sophisticated in profiling customer (and user) behaviour, I think it would be very smart of insurance companies to take more than just the traditional, broad characteristics into the mix when underwriting and pricing a risk. Does it not matter more HOW someone drives versus WHAT they drive when evaluating their likelihood of getting into a car crash? I think it makes common sense. With the applications of new media, social networks and the resulting customer behaviour, I think there’s a lot of opportunities for insurance companies to be a bit innovative and create new products and be more profitable by being better at writing risks, and for consumers to pay a fair price for the insurance they specifically need.