Using Social Media To Measure People’s Insurance Risk

Insurance companies can now use people’s social network profiles to determine risk and set insurance rates.

Social Media Risk

Profiles and posts on social media sites like Facebook, Twitter and Instagram provide the most honest and unfiltered personal information about a person’s risk-taking behavior than any other source.

The sharing of personal details and activities on social sites provides a cheap, up-to-date source of information about a person’s moods, pastimes, alcohol consumption, marital status, employment status etc.

Social media information can be scanned and evaluated in real-time and at little cost; whereas, pulling credit reports and other public records to evaluate customer risk can cost insurers time and money.

A company called Social Intelligence Corp has developed the first real-time system for scanning and scoring your online social activities in real time and measuring your risk for property and casualty insurance providers.

The system uses thousands of data points from a person’s social web to determine their risk level.

Details from a person’s social media profiles are cross-referenced with information provided by the customer as well as online public records.

Social Intelligence Corp has a track record in using social media screening to make predictions about people and their behavior. Their first people-focused product was a social media background check service that is used by employers as well as federal and local governments.

The Federal Trade Commission has even approved the social media background check tool developed by Social Intelligence Corp.

This social media evaluation can be used by insurers to set rates, handle underwriting and process claims.

As for the privacy issues, the Social Media Risk Scoring tool is an opt-in service and people can choose not to use it.

However, insurance companies will likely offer incentives to people who agree to have their social profiles scored by Social Intelligence.

Social media insurance risk assessment has some potential benefits for both consumers and insurers.

Up to 64 million people are unscorable by insurance companies due to a lack of credit history. Out of these 64 million people, around 1 out of 3 would not be considered high risk.

In addition, around 55% of younger people are willing to share their social media activity in exchange for discounts and incentives from insurance companies.

On the downside, online social profiles can reveal things about people that can make insurers think twice about taking them on a customers.

Allstate has taken a proactive approach to warning people about the dangers of sharing their location on social media sites. Their ShareAware program warns people that sharing location information online can alert criminals when they’re away from home.

A 2015 study from Stanford University revealed that computer analysis of a person’s Facebook “likes” was more accurate at predicting people’s personalities than the opinions of friends and family.

Only spouses came close to matching the computer’s ability to “know” a person, demonstrating that computers can get to know us better than family, friends and colleagues.

Screening people’s social network profiles has a growing number of important uses:

  • Financial Fraud
  • Legal Discovery
  • Employment Screening
  • Identity Verification
  • Investigations
  • Background Checks
  • Risk Assessment

Additional Sources:

Stanford research finds computers are better judges of personality than friends and family

Social Intelligence Corp