Is Social Media Scoring to Get an Insurance Premium a Good Idea?

I caught up with Jerry Powers, Business Development Manager from Simplesolve (Enterprise Insurance Software company in the US) to know how social media scoring works from the technical side. Here is what he says…

All insurance policies have depended upon criteria like medical assessments and employment status to determine an individual’s risk level. The higher the risk, the higher the insurance premium. But with advancements in technology, additional data is now available for underwriting and claims processing.

Social media has penetrated almost every aspect of our lives. A majority of us have at least one social media account and we regularly share updates on our profiles for our connections to see. But beyond posting the perfect shot of our breakfast, can social media actually be a tool for insurance companies to evaluate an individual and determine their insurance premium?

The use of social media posts as credible research sources is a legal method in insurance processes. Shouldn’t, social media scoring be a part of your agent’s routine background assessment process or in claims processing?

Social media scoring could be faster than traditional approaches

Social media scoring cannot be the only form of risk evaluation, but it could definitely be one of the information sources of an individual’s eligibility. Risky behavior like excessive drinking and smoking can easily be spotted on social media. Traditional risk evaluation might take much longer to uncover these practices. In many cases, with conventional methods, a lot of risk factors can actually go unnoticed. This affects the accuracy of the final insurance premium estimate. Social media checks are also less expensive to conduct since they only require the underwriter to do a quick scroll-through of the applicant’s feed.

The first documented case of social media in claim processing was in 2013, in Astoria. The police were investigating the damage to two cars that had been side-swiped at night. Finding the person responsible would have been impossible if Jacob Cox-Brown had not put a status update “ Drivin drunk… classic but to whoever’s vehicle I hit I am sorry. :P”. When police matched the damage to his car, he was arrested, and insurance cleared the claim for both car owners. This incident threw into the limelight, for insurers, the importance of not ignoring social media.

Also Read: Can Automated Underwriting Impact Quality of Your Customer Base?

What do insurers look for when conducting a check?

Evaluating an applicant’s eligibility through social media requires insurance underwriters to dig deeper into the meaning behind seemingly innocuous posts. For example, we wouldn’t think twice about a person posting their weekend parties on social media, but for an insurance carrier, frequent posts of this kind could suggest alcoholic behavior. If such an individual was applying for P &C insurance, it could affect their premiums. The same goes for posts about adrenaline-pumping activities like race car driving, skydiving, bungee jumping, and so on. Agents can also look up a person’s family background on their social media. If they post about their parents being sick with a hereditary disease like type 2 diabetes or breast cancer, the agent can assume the individual is also at risk for developing these conditions. This would again potentially raise their health insurance premiums.

Oversharing on social media can also be a red flag for insurance carriers. Is the individual putting up a lot of pictures of their house layout or personal security details when they’re going on vacation? This might make them a potential target of theft, which could increase their property insurance premiums.

Read more about the security concerns surrounding this new entrant in risk management.

Originally published at https://www.simplesolve.com on August 31, 2021.