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Should Facebook affect rates?

By Jay MacDonald · Bankrate.com
Tuesday, December 13, 2011
Posted: 10 am ET

Could the information you post to Facebook, Twitter, LinkedIn and other social media come back to haunt you in the form of higher insurance rates?

Absolutely, according to a new study by Celent. In fact, the Boston-based research group predicts that within three years, social media will be integrated into underwriting practices for various types of insurance, including health insurance, auto insurance and homeowners insurance.

Insurance companies already use social media in the claims arena to track down customers they suspect of trying to con them (think staged auto accidents) or overclaim ("Hey, I had a whole tiki bar in that basement!"). In the past two years, they've moved strongly into social media for sales and marketing purposes (who hasn't?).

Now, according to Celent senior analyst and study co-author Michael Fitzgerald, "Underwriting is next."

What possible interest could an insurance underwriter have in your your online social life?

Two words: risk profile. Before an insurer offers to share the financial risk of misfortunes that may befall you, whether they be auto accidents, home fires, health crises or outliving your money, they want to know as much as possible (and the law allows) about your habits, interests, friends, associates and typical purchases.

They don't mean to pry (OK, they do, but they don't want to be overly obnoxious about it) but it's a fairly important step in their decision a) to strap themselves to your fate and b) on what terms.

Hmmm, what might be the easiest way to gather all of those colorful details? After all, a 2010 study by the Pew Research Center found that 40 percent of all U.S. Internet users, and 77 percent of those in the 18-29 age group use social networking sites.

The ethics of including social media in your risk profile when underwriting your auto insurance, homeowners insurance and health insurance is currently a terra nova with few landmarks or precedents. There's the slippery slope of online privacy, that great oxymoron of our age. And the whole "truthiness" of what is posted online.

It's one thing for an insurer to gather accident data from one's driving record or health data from other insurers via the MIB (formerly the Medical Information Bureau) and quite another to jack your premium because your cousin Lisa tweeted that you like to drive with a six-pack between your knees.

So, this question: Do you think it's fair, right, and/or legal for insurance companies to factor in your social media posts before setting your insurance terms and rates?

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1 Comment
Greg
December 14, 2011 at 6:22 am

Insurance companies will stoop to any kind of information gathering technique in order to deny payment of a claim or any excuse to raise a premium. Insurance companies are the most lucrative industry aside of gaming. All promise and no payouts.
This country would be far better off without liability laws and underwriters.