Within certain limits, insurance companies can monitor your social media activity and use the information when setting life insurance policy rates
In 2019, the New York Department of Financial Services released guidelines making it legal for life insurance companies to use social media data to help determine customer premiums. These rules allow insurance companies to utilize various external data, algorithms, or predictive models while gathering information for rates as long as the data source isn’t discriminatory.
The idea is that insurance companies can use social media posts to discover how likely customers are to develop severe illnesses and engage in dangerous activities that contradict applications, and adjust their premiums accordingly.
Here’s what you should know about how insurance companies use social media to determine premiums and what you can do about it.
What insurance companies are looking for
Having an insurance company go through your social media profiles seems pretty invasive, but there are some limits to doing it. A provider must have a specific purpose for assessing this information.
These companies don’t have the time or resources to go through every social media post you’ve made, searching for instances where you participated in risky activities. In fact, a 2010 New York court decision—McCann vs. Harleysville Insurance Company—determined that insurance companies cannot randomly browse social media profiles, hoping to find evidence.
Instead, they’re looking to determine your credibility. In doing so, the insurer might review your profiles if some application information seems out of the ordinary or requires corroboration. They must have a reason to visit your social media profiles based on your application.
For example, suppose you’ve dealt with heart issues in the past. In that case, the insurance provider might look at your social media accounts for pictures of you drinking, smoking, or participating in other activities that could further these problems.
Or, if you were once ineligible for certain types of life insurance because of a dangerous hobby like rock climbing, the provider might scan your profiles for new pictures of you climbing if your application no longer has this activity listed.
The gist is that insurance companies aren’t necessarily interested in your day-to-day activities. But they can assess ventures that could put you in a higher risk category.
What else insurance companies can do
Insurance providers reviewing social media profiles isn’t new, although the explicit rules allowing the information to help determine premiums are only a couple of years old. There’s more to it, though, as most companies are now collecting data on most of your activities.
For instance, big data includes records of much of what you’re doing because of your internet search history, shopping activities, and even the location tracking on your phone. As insurance companies use this data to determine your risks, you could see your premiums increase or decrease based on activities you aren’t even documenting on social media.
We’re only at the beginning of this process, but it’s worth understanding how various behaviors, from purchases to app use, may be assessed by providers.
Rules on discrimination
Remember, the law states insurance companies must prove that the data they’re using isn’t discriminatory when applying it to your insurance premiums. Therefore, your race, color, national origin, past lawful travel, sexual orientation, or status as a victim of domestic violence cannot influence your premiums in any way.
Algorithms may be inherently biased because they lack reasoning skills. Therefore, you could have some recourse if you feel that discriminatory practices influence your life insurance premiums.
Steps you can take to protect your data and lower costs
While it might seem like the only option is deleting your social media presence, you should know that similar information could be available to your insurance company anyway through friends’ accounts or various big data tracking information.
However, removing things like photos of yourself drinking excessively or smoking can make it more challenging for insurance companies to find that information. Better yet, always tell the truth on your life insurance application because that ensures you have less to worry about. In fact, supplying an accurate application that your social media accounts support can make it easier to verify your statements.
And remember: the insurance industry remains heavily regulated, so there may be recourse if a company randomly digs through your history to uncover every misstep you’ve made.
Unlike big tech, which can largely use the information it gathers as it wants (e.g., to push you into buying products or services), insurance is supervised by commissioners who deem it an essential service. These entities attempt to provide some checks and balances to ensure you can receive a policy that adequately protects you.
Finding the right insurance policy
As long as you think twice about posting items that directly contradict your life insurance application and answer your policy’s questionnaire honestly, your social media presence shouldn’t have much effect on your premiums.
And the best way to prevent social media from becoming an issue is to fill out your life insurance application honestly. That leaves little for the insurance company to learn from your online presence.
A lot goes into finding the right life insurance policy, but NICRIS Insurance Agency can help. Whether you’re searching for a free, personalized insurance review or have specific questions, contact us today.