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The Rise of Digital Data in Insurance Risk Profiling

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Unless you’ve had your head in a hole, you will have heard about Admiral’s plan to use social data from Facebook. ‘Firstcarquote’ planned to analyse the Facebook posts of first-time car owners, looking for evidence that they’re the kind of well-organised, conscientious drivers who will be safe on our roads.

Facebook blocked Admirals plans at the 11th hour, citing it was their upmost priority to protect the privacy of the people on their site. Facebook privacy has long been one of Zuckerberg’s main concerns, and Facebook’s platform policy states that the site’s data should not be used to “make decisions about eligibility, including whether to approve or reject an application or how much interest to charge on a loan”.

Having access to social and digital data would be of great assistance to insurance companies like Admiral, allowing them to offer tailored discounts to high-risk segments that opt-in to extra data gathering.



This raises an interesting question:

“Would giving up our digital data improve insurance risk profiling algorithms, and if so would we, the British public, hand this over in exchange for a discounted premium?”

In the case of Admiral, they were looking to reduce risk in one the riskiest customer segments to insure. In 2012, a fifth of people killed and seriously injured (KSI) on the roads were involved in a collision where at least one of the vehicles was a car being driven by a young driver.

We as customers live in an increasingly transparent world, where data privacy is becoming harder and harder. However, as customers we are becoming acutely aware just how much personal data companies are now storing. From my perspective it feels like sentiment in younger generations is slowly changing towards an acceptance of greater data transparency.

I feel that many customers will allow companies to hold personal data, but there must be a fair value exchange to make it worth the customer’s while – up to £350 off Admiral customer’s premiums in Admirals case.

There must be a fair value exchange…

 The Internet of Things and Telematics are powerful tools, that will gather many GB’s of our personal data in years to come.

In other insurance segments this practice is becoming more prevalent: For example, Vitality is currently selling the Apple Watch to health and life insurance customers, with the final price dependent on how much exercise customers do while owning the watch. Newspapers like the Guardian are publishing opinion articles titled : Internet of things: the greatest mass surveillance infrastructure ever?, highlighting the increasing concern that big data will directly influence our privacy.

Is big business now big brother?

Simon Morrissey, head of data and privacy at law firm Lewis Silkin, said: “This is the tip of a very large iceberg that consumers and businesses are increasingly going to encounter. The challenge with these sorts of solutions is that users may find it increasingly difficult to avoid opting in as the financial disadvantage in doing so becomes so significant that users have no other option but to hand over access to their data.”

Over the coming years, all insurers will seek to gain as much data as possible on their customers to help them better profile and target a more personalised service.  The problem is, the customers who wish to keep their privacy may end up losing out and paying a higher premium, as the need for data switches from a nice-to-have to a must-have.

In this recent case, Admiral agreed a compromise, where they would give all customers who opt into ‘Firstcarquote’ a discount, without learning anything about them from their Facebook profile.

I have only scratched the surface of this interesting predicament, please comment and share your experiences with us on twitter:




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