Could insurers be planning to exploit Facebook to tailor their premiums?

This article was published on: 08/17/12

Facebook eye

As we move further into the technological age it is safe to say that the vast majority of people in the United Kingdom own or know someone who owns a Facebook or Twitter account where they can interact with their friends and share pictures and thoughts, but are Facebook and Twitter being used as more than that by insurers?

A lot has been said by and about the insurance sector when it comes to personal injury and increased policy prices. With this year showing a staggering increase in third party claims, they were quick to shift the majority of the blame on to Claims Management Companies (CMCs) forcing the hand of people, without acknowledging the fact that they too were contacting accident victims and encouraging them to pursue a claims illicitly.

But after reading a piece in the most recent publication of the Post Magazine it would seem the means that insurers are perhaps prepared to go to in order to raise their incomes could be about to rise to a whole new level.

The article called ‘Facebook is your Friend’, discusses the impact that social media sites, such as Facebook and Twitter, has already had on the insurance sector, describing that it has enabled insurers to discover more about the risk profiles of their potential consumers. But the main focus of the article is whether or not the information and knowledge gained from Facebook and other social media sites ‘could and should’ be used to help them compile quotes.

What follows displays the thought process of an insurer. In one section of the piece it discusses how research on a policy holders partying habit could be used to assume that every now and then they would ‘throw caution to the wind’ in regards to drink driving.

Based on this assumption, which has only been devised because the potential consumer likes to have a drink in their free time, the insurers would then see fit to offer an increased premium to cover this risk.

The article also talks about the monitoring of who the consumer associates with through their social media accounts. Here the suggestion is to decipher whether or not he/she is a trustworthy person based on who they talk and interactive with.

Facebook is a fantastic tool for all sense and purposes and offers something for everyone in regards to interaction. But surely it is an abuse of Human Rights and privacy to judge how much to charge someone on this sort of information.

Another piece of the article talks about the opportunity to target holiday and hobby insurance. Here the author suggests checking an applicants past exploits to draw up a conclusion on how risky it would be to insure them and if in a case there has been past difficulties then this would be exploitable in offering future insurance.

Now without sounding overly critical but holiday disasters are quite common and often are a one-off. A lot of the time it can be down to bad luck but this in no way should be used in some sort of point scoring system to increase your insurance premium.

One line in the article sums up the attitude of the insurers better than any though. It simply states: “Using social media to help judge risk could improve profitability and help insurer maintain a healthy balance”.

It is this attitude that many within the personal injury sector have insisted exists within the insurance sector when it comes to issues such as personal injury claims and exactly the attitude that they are trying to move away from.

For them it is not about the people they are insuring or the injured parties getting the compensation that they deserve. It is all about what is profitable for them. This would certainly go along way to support their reasons for investing in selling on personal injury claims which they encouraged using illicit texts and phone numbers.

It would further go on to explain their attitude towards finding ways around the referral fee ban and gives an incite on their next potential move in order to keep premiums rising, something that the Jackson Reforms and specifically the referral fee ban is set decrease.

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