How Insurance Companies Will Influence Rates Based On Your Tweets: Social Insurance Rates

Expect insurance and wellness companies to monitor social data, then reward –and penalize member actions.

Companies Want Accurate Customer Data and Social Data Promises a Gold Mine
In our recent research report on Social CRM, we studied how companies will use social data to amend existing customer databases. We mapped out which use cases are ready now, and which ones we expect to see in the future. We expect in the future that companies will give customers an improved customer experience, or improve innovation of products and services by using customer data. (SCRM use cases: CX1, 2 and I1). Just as companies use previous purchasing behavior, demographics, psychographics and other studies, we expect companies to take advantage of the social data that customers are providing to the public, in order to make better decisions.

Insurance Companies Already Influence Rates Based on Historical Behavior
Nothing new here. Insurance and Healthcare companies want safe and healthy customers. In fact, AllState’s mantra of rewarding good drivers with lower rates has been the mainstay of their advertising blitz. Health companies like Kaiser encourage members to participate in ‘Wellness programs‘, to increase overall awareness of healthy lifestyles and health.    We already know that age, health, and behavior is already factored into rates, so we should expect insurance companies to extend their programs to also include social data.

Hypothetical?  Actually, it’s already happened.  We know of this Canadian woman who claimed medical disability, but was soon denied after the employer and insurance company discovered Facebook pictures of her on a beach.

Three Ways Companies Can Influence Rates Based on Social Data
Using a variety of Social CRM techniques (like the ‘5Ms’ to map social profiles to existing customer records), companies can conduct the following three use cases:

  • Monitor and glean intelligence: These insurance companies could monitor what members are saying, then offer suggestions on wellness, activities, and being healthy. Overtime, they can develop intelligence and eventually predictive models based upon members published information and their overall well being.  Expect companies to quickly be able to size up new members based upon their existing social behaviors online in order to influence the packages and rates they’ll offer.
  • Penalize ill-behavior: Insurance companies could monitor customers, and those that participate in a negative way online could be penalized. Example: Checking into bars four times a week consistently when it’s not your job could yield a 10% increase. Anyone who earned the “Crunked” badge (going to four places in one night, referring to binge drinking) could receive a 10% increase in fees (unless of course, you’re the Budweiser delivery person). Or, anyone posting pictures of them skydiving or any picture while driving on the freeway from the drivers seat, would yield an increase in car insurance.
  • Reward members with pro-wellness activity: Rather than punish bad behavior, insurance companies could incentivize members to participate in pro-health programs. For example, members that regularlly publish their stats to Nike Plus, a system that connects Nike Shoes, iPods, and the internet to track running stats, could benefit from a decrease in health rates. Or, people that frequently check into healthier food alternatives like Trader Joes or Whole Foods, rather than a fast food place, may have a decrease in insurance rates for the family.

Yet ‘Social Insurance Rates’ Fraught with Challenges
Web strategy is all about tradeoffs, to get a benefit, you have to give up something, here’s the risks as I see them.

  • The data may not be accurate. Just because someone indicates they’ve gone to a bar doesn’t mean they’ve indulged in Irish car bombs till the sun goes down or even drank at all.  Don’t expect all checkins, self-expressions to be accurate on how they are actually living.
  • The data could be gamed: it’s difficult to tie actual confirmation of said activities with the reality that they have.  Anytime rules are set in place, there are opportunities to game it, expect loopholes and automated publishing tools to misrepresent actual behavior.
  • Members will clam up to evade the ‘stick’: If customers know that data they publish will be used against them, they’ll lock up the data and not make it public.  Instead, they’ll just make their data available to their friends and trusted confidants –no longer public.
  • Legal implications unexplored: We’ve not even explored how companies may be put at risk by using public information for or against members, which would result in a new class of legal services, great.

Conclusion: Expect Companies to Offer Opt-In Programs for “Social Insurance Rates”
To combat the above mentioned risks, I would expect health and insurance companies to offer an opt-in method for existing wellness programs to be extended to tools like online education courses, participating in wellness programs with peers (like Nike Plus) or allowing members to submit location based checkins to the gym, healthy eating, and other pro-health activities.   We should expect that a forward-thinking insurance or wellness company offers an online incentive based program to encourage members to connect to each other, become more educated, and live a healthy lifestyle.

(The Social CRM Pioneers online group is already have a discussion around this topic, join in here). Update: Marketing Vox has extended the conversation and pointing out some other examples of how financial services firms are looking at social data. See how Rapleaf aggregates your online reputation, and how financial services firms are using it. I assert this isn’t much different than credit scoring systems already in place. )


Update Nov 21, 2010: NYT Article
New York Times: Insurers Test Data Profiles to Identify Risky Clients. Despite various viewpoints in the comments, there’s already signs that insurers are exploring new types of data, here’s a quote on how some data companies are scraping social info:

“Increasingly, some gather online information, including from social-networking sites. Acxiom Corp., one of the biggest data firms, says it acquires a limited amount of “public” information from social-networking sites, helping “our clients to identify active social-media users, their favorite networks, how socially active they are versus the norm, and on what kind of fan pages they participate.”

120 Replies to “How Insurance Companies Will Influence Rates Based On Your Tweets: Social Insurance Rates”

  1. i’m part of an ongoing twitter chat (@co_health) where we talk about improving workplace wellness. we recently spoke about privacy and how social media relates to it. the points you make about the challenges already exist in the current approach. for example, a required health risk assessment. anyone can it for the incentive and supply fraudulent answers. and many employees don’t participate because they’re worried about how it’ll affect their insurance (will they be dropped?), whether there’s any truth to their concerns or not. and then there’s the concern about privacy overall — “my company’s got no business meddling in my health and habits.”

    i think the notion of opt-in communities of health within an organization’s going to be huge soon. (i wrote on why here: http://bit.ly/dAHtBh) i also think we’re going to see more companies being more direct about their place in influencing their employees’ health behaviors (http://bit.ly/azCWVB).

    f

    f

  2. I would be interested to know whether the increase in rates would actually cover the amount of increased staff the insurance companies would have to hire to track all their customers and analyze their behavior. I imagine they would have to set up a fairly sophisticated decision-making process.

    I also wonder what the impact would be on the use of applications such as FourSquare and Gowalla–would they lose business clients due to a lack of checkins?

    This is fascinating stuff and I look forward to following your research on the topic.

  3. I would be interested to know whether the increase in rates would actually cover the amount of increased staff the insurance companies would have to hire to track all their customers and analyze their behavior. I imagine they would have to set up a fairly sophisticated decision-making process.

    I also wonder what the impact would be on the use of applications such as FourSquare and Gowalla–would they lose business clients due to a lack of checkins?

    This is fascinating stuff and I look forward to following your research on the topic.

  4. Kerstin

    We should expect a vendor to emerge that will offer these services in an automated way. A brand monitoring company that understands the healthcare and insurance vertical will be able to make sense of this and sell a 6 figure deal which could steadily grow.

  5. Kerstin

    We should expect a vendor to emerge that will offer these services in an automated way. A brand monitoring company that understands the healthcare and insurance vertical will be able to make sense of this and sell a 6 figure deal which could steadily grow.

  6. An interesting perspective, but I think it falls apart at the end. You make two points that I completely agree with:

    Data could be inaccurate – When you asked this morning if anyone had the “Crunked” Foursquare badge, I responded that I did. The only why that I was bestowed this honor was by attending SXSW this year. Anyone who has been to SXSW knows that the number of bars that you attend at SXSW has no bearing on your real live outside of that event. I haven't even been back to a bar of any sort since then. Not a very accurate depiction of me as an insured customer.

    The data could be gamed – Of course. If insurance companies actually entertained this concept, I would create the most responsible, boring, socially acceptable profiles and submit them willingly to my agent. This would also force me back to 2005 when everything I did online was under a fake persona that I meticulously maintained as a real person (to your third point of members clamming up).

    Great post, keep up the good work.

  7. An interesting perspective, but I think it falls apart at the end. You make two points that I completely agree with:

    Data could be inaccurate – When you asked this morning if anyone had the “Crunked” Foursquare badge, I responded that I did. The only why that I was bestowed this honor was by attending SXSW this year. Anyone who has been to SXSW knows that the number of bars that you attend at SXSW has no bearing on your real live outside of that event. I haven't even been back to a bar of any sort since then. Not a very accurate depiction of me as an insured customer.

    The data could be gamed – Of course. If insurance companies actually entertained this concept, I would create the most responsible, boring, socially acceptable profiles and submit them willingly to my agent. This would also force me back to 2005 when everything I did online was under a fake persona that I meticulously maintained as a real person (to your third point of members clamming up).

    Great post, keep up the good work.

  8. Thanks Brian.

    An “opt-in' community program could work. For example, if Kaiser developed their own version of Nike Plus, where a community of friends could be educated, train for marathons, and then participate in one, could yield an overall improvement in health.

    If Kaiser was clever, they could use a peer-based system to validate identities, along with pictures and verified ID numbers.

    The way I see it is like this: If companies can track employees who 'punch' into the time clock, and work on site, they could do the same thing for customers.

  9. Thanks Brian.

    An “opt-in' community program could work. For example, if Kaiser developed their own version of Nike Plus, where a community of friends could be educated, train for marathons, and then participate in one, could yield an overall improvement in health.

    If Kaiser was clever, they could use a peer-based system to validate identities, along with pictures and verified ID numbers.

    The way I see it is like this: If companies can track employees who 'punch' into the time clock, and work on site, they could do the same thing for customers.

  10. An interesting analysis that should spark some serious debates about privacy issues:

    It's all about information asymmetry http://bit.ly/9wkdQh between the client and its insurer. Letting insurance and other companies tap into their users' social-data would allow them to circumvent existing regulations that aim to protect customers (medical secret for instance). I can understand the appeal of having lower rates if you accept to disclose more about your life but how this could affect you over the long-term? Without regulations this could become mandatory to be insured, then I can't imagine how difficult it would be to prevent my information to be shared or scrutinized by governments.

    @jowyang #insurance Without regulations and the appropriate #privacy settings, I'm highly suspicious that people would let that happens.
    @jowyang It reminds me 2 similar initiatives, GPS assisted “pay as much as you drive” and black-boxes in cars to monitor/verify your driving

  11. Love the discussion you prompted, Jeremiah. I like the opt-in idea. Self-reporting via social site opt-in will get consumer buy-in (just like offline self-reporting does.) I don't know that people will be comfortable with insurance firms sizing them up (without permission) via consumers' social site behaviors.

  12. Love the discussion you prompted, Jeremiah. I like the opt-in idea. Self-reporting via social site opt-in will get consumer buy-in (just like offline self-reporting does.) I don't know that people will be comfortable with insurance firms sizing them up (without permission) via consumers' social site behaviors.

  13. Until our online social presences are completely automated, I doubt that social insurance rates will get much traction due in large part to what you already pointed out, gaming the system. Right now, my insurance company might have no idea whether I'm skydiving without a helmet, eating a triple stack with bacon and cheese, or reading in a rocking chair at home. If I opted into a social insurance plan, my incentive would clearly be to not mention 2 of those activites.

  14. Until our online social presences are completely automated, I doubt that social insurance rates will get much traction due in large part to what you already pointed out, gaming the system. Right now, my insurance company might have no idea whether I'm skydiving without a helmet, eating a triple stack with bacon and cheese, or reading in a rocking chair at home. If I opted into a social insurance plan, my incentive would clearly be to not mention 2 of those activites.

  15. I don't believe much of this will hold up legally, unless opt-in. But another very important dimension you haven't addressed is the political backdrop and the policies of the current administration and the health care bill that was passed. Most of the “stick” like behavior is counter to the macro political trends and legislation. (I'm not supporting these trends, just pointing them out)

    I also believe that semantic analysis, check in analysis, the picture of someone who is disabled “on a beach” is fraught with error and misinterpretation. So, on a macro level, politically and legally, I don't think this will fly. And on a personal level it really creeps me out.

    @philiphotchkiss

  16. I don't believe much of this will hold up legally, unless opt-in. But another very important dimension you haven't addressed is the political backdrop and the policies of the current administration and the health care bill that was passed. Most of the “stick” like behavior is counter to the macro political trends and legislation. (I'm not supporting these trends, just pointing them out)

    I also believe that semantic analysis, check in analysis, the picture of someone who is disabled “on a beach” is fraught with error and misinterpretation. So, on a macro level, politically and legally, I don't think this will fly. And on a personal level it really creeps me out.

    @philiphotchkiss

  17. Don't disability insurance companies already monitor members in the real world? That's not opt-in so it's hard to see how it could be completely different.

    Zena, I hope you're well, it's great to hear from you again.

  18. Don't disability insurance companies already monitor members in the real world? That's not opt-in so it's hard to see how it could be completely different.

    Zena, I hope you're well, it's great to hear from you again.

  19. I was just about to say “I hadn't considered that” when I recalled that common advice to social media/network participants is that you have to assume that anything you post online, even if in private, could eventually become public. I guess then that it really depends on your level of paranoia, right?

  20. I was just about to say “I hadn't considered that” when I recalled that common advice to social media/network participants is that you have to assume that anything you post online, even if in private, could eventually become public. I guess then that it really depends on your level of paranoia, right?

  21. Who is doing it right now? Unfortunately nobody. There is a big difference between social CRM and using social channels for surveillance. CRM is used to model an entire customer base and develop programs to change or encourage behaviors. Surveillance is used to mange individual cases. But Jeremiah does highlight the amazing potential that social information contains to understand people based on behaviors in the real world rather than with just your products. The challenges – getting them to link accounts (privacy issues, ability to match accounts) and then sorting them into valuable categories.

    Here is a recent attempt to understand the value of a Facebook Fan – essentially to see the incremental value that a social membership base may have over non-fans – http://www.syncapse.com/media/syncapse-value-of

  22. i'm part of an ongoing twitter chat (@co_health) where we talk about improving workplace wellness. we recently spoke about privacy and how social media relates to it.

    the points you make about the challenges already exist in the current approach. for example, a required health risk assessment. anyone can it for the incentive and supply fraudulent answers. and many employees don't participate because they're worried about how it'll affect their insurance (will they be dropped?), whether there's any truth to their concerns or not. and then there's the concern about privacy overall — “my company's got no business meddling in my health and habits.”

    i think the notion of opt-in communities of health within an organization's going to be huge soon. (i wrote on why here: http://bit.ly/dAHtBh) i also think we're going to see more companies being more direct about their place in influencing their employees' health behaviors (http://bit.ly/azCWVB). there are companies currently using networks and incentives to guide healthy behaviors (stikk.com, virgin healthmiles are two). the solutions are coming fast and furious from the marketplace, but not necessarily from the insurance providers and companies are lagging in their use of social networks, much as they are internally anyway.

    you might also be interested in this recent report on patientslike me and how their collaboration improved health outcomes: http://bit.ly/9QyOxA

    fran melmed
    http://freerangecomm.com
    @femelmed

    f

  23. i'm part of an ongoing twitter chat (@co_health) where we talk about improving workplace wellness. we recently spoke about privacy and how social media relates to it.

    the points you make about the challenges already exist in the current approach. for example, a required health risk assessment. anyone can it for the incentive and supply fraudulent answers. and many employees don't participate because they're worried about how it'll affect their insurance (will they be dropped?), whether there's any truth to their concerns or not. and then there's the concern about privacy overall — “my company's got no business meddling in my health and habits.”

    i think the notion of opt-in communities of health within an organization's going to be huge soon. (i wrote on why here: http://bit.ly/dAHtBh) i also think we're going to see more companies being more direct about their place in influencing their employees' health behaviors (http://bit.ly/azCWVB). there are companies currently using networks and incentives to guide healthy behaviors (stikk.com, virgin healthmiles are two). the solutions are coming fast and furious from the marketplace, but not necessarily from the insurance providers and companies are lagging in their use of social networks, much as they are internally anyway.

    you might also be interested in this recent report on patientslike me and how their collaboration improved health outcomes: http://bit.ly/9QyOxA

    fran melmed
    http://freerangecomm.com
    @femelmed

    f

  24. It would be really interesting if in the future someone was able to show causation from social insurance plans to healthier customers. I doubt it will happen, but I agree that there is an opportunity here. More than likely, I imagine there will be a dustup over privacy after which people who don't mind filtering themselves might go with social insurance and people who do will try to switch providers.

  25. It would be really interesting if in the future someone was able to show causation from social insurance plans to healthier customers. I doubt it will happen, but I agree that there is an opportunity here. More than likely, I imagine there will be a dustup over privacy after which people who don't mind filtering themselves might go with social insurance and people who do will try to switch providers.

  26. Pingback: HHO Bubblers
  27. Thanks Fran for that perspective. For your first article on how employers should make wellness social, there's a side benefit of employees self-organizing wellness programs. Your second article “Should employee healthy be private?” Wow that's a deep topic. Yet many internet denizens are publishing their health, sleep patterns, and eating behaviors online.

    For example, many foodies take pride in eating exotic tasty fare. Little do they realize that in many cases, this could be high fat, high cholesterol, rich foods. Could foodies be at greater risk for diabetes and high blood pressure than others? I'm sure we could find data.

  28. Thanks Fran for that perspective. For your first article on how employers should make wellness social, there's a side benefit of employees self-organizing wellness programs. Your second article “Should employee healthy be private?” Wow that's a deep topic. Yet many internet denizens are publishing their health, sleep patterns, and eating behaviors online.

    For example, many foodies take pride in eating exotic tasty fare. Little do they realize that in many cases, this could be high fat, high cholesterol, rich foods. Could foodies be at greater risk for diabetes and high blood pressure than others? I'm sure we could find data.

  29. Jeremiah,
    It is for this reason that I'd advise people to not post certain information on public channels – and health related information is on that list. Personally I opted not to tweet or otherwise disclose a particular visit I made to the hospital a while ago (don't worry, turns out it was nothing), for this very reason. From what I can tell, current privacy laws seem to prevent companies from inquiring or sharing — but not from listening to or using your disclosure. The problem is that your disclosure (of information about your health, that could impact things like insurance rates) should only be made under disclosure (that your information can be used by your insurance company).

    Note also: Insurance companies are sponsoring health advocacy communities. One that I became aware of as a result of work I was doing in this industry (but not on this project) was http://wellthen.org/ – a community sponsored by Harvard Pilgrim Health Care. IMO this attempt at community faces many challenges. Part of their motivation is clearly to be viewed as more than an insurance company, but a health advocate. But that perception will be thinned out if such companies then leverage the information you share in ways you were not aware of. (I'm sure they don't.) This could only lead to gaming the system. I have a tough time seeing people get comfortable with this idea — even people who are opting in and checking in at heath-clubs. Rather than relying on social disclosure — I bet a periodic blood test would be a much more valuable data point for the forward thinking healthcare provider. Even if we has a blood-meter with a digital signature, and twitter capability, I'd expect it to only be trusted if administered by a trusted organization (e.g. doctor's office).

  30. Uhm most insurance in the United States is highly-regulated, both at the federal and state level. A good portion of these regulations deal with rate setting, and the factors that are used in rate setting. For instance, in the auto insurance market, some states do not permit gender to be used as a factor in rate setting, while others do. In some states, an evaluation of your financial responsibility can be factored in, whereas in other states it cannot. As a rule of thumb, insurance companies can not come up with arbitrary factors that aren't first approved by the appropriate insurance regulators.

    I don't know why you even mentioned health insurance given the new federal healthcare law, which essentially has the purpose of doing exactly the opposite of what insurance is really all about (pricing a policy based on actual risk).

    Bottom line: insurance companies will not include “social factors” simply because in just about every insurance market in the United States, they cannot by law. Furthermore there is no actuarial basis to do so, so it is unlikely that you will ever see an insurance company seek approval for “social” factors.

  31. Uhm most insurance in the United States is highly-regulated, both at the federal and state level. A good portion of these regulations deal with rate setting, and the factors that are used in rate setting. For instance, in the auto insurance market, some states do not permit gender to be used as a factor in rate setting, while others do. In some states, an evaluation of your financial responsibility can be factored in, whereas in other states it cannot. As a rule of thumb, insurance companies can not come up with arbitrary factors that aren't first approved by the appropriate insurance regulators.

    I don't know why you even mentioned health insurance given the new federal healthcare law, which essentially has the purpose of doing exactly the opposite of what insurance is really all about (pricing a policy based on actual risk).

    Bottom line: insurance companies will not include “social factors” simply because in just about every insurance market in the United States, they cannot by law. Furthermore there is no actuarial basis to do so, so it is unlikely that you will ever see an insurance company seek approval for “social” factors.

  32. We're taking social reputation too seriously, let's not forget most people still “don't get it” even if they're on it. Your pipe dream of implications is borderline Orwellian, and the logistics behind affecting insurance rates based off of social interaction puts these services and their userbase at a much larger risk.

  33. We're taking social reputation too seriously, let's not forget most people still “don't get it” even if they're on it. Your pipe dream of implications is borderline Orwellian, and the logistics behind affecting insurance rates based off of social interaction puts these services and their userbase at a much larger risk.

  34. i agree on the benefit of employees self-organizing, if not programs, networks around interests, conditions, and goals. these can easily be added onto existing company social network systems, exist on their own as part of a benefits or wellness website, or created via external systems.

    i spoke with thomas goetz for an interview on my blog, and one thing he said really stuck with me (paraphrasing here): people are going to be more open to sharing their health data now that it has currency. soon it'll be like online dating — we don't think twice about it.

    re: foodies, i have no idea about research, but frank rich, the food critic, has spoken about his issues with food (beyond it being just high fat). i would think other things come to play here, like exercise habits, genetics, etc.

    f

  35. i agree on the benefit of employees self-organizing, if not programs, networks around interests, conditions, and goals. these can easily be added onto existing company social network systems, exist on their own as part of a benefits or wellness website, or created via external systems.

    i spoke with thomas goetz for an interview on my blog, and one thing he said really stuck with me (paraphrasing here): people are going to be more open to sharing their health data now that it has currency. soon it'll be like online dating — we don't think twice about it.

    re: foodies, i have no idea about research, but frank rich, the food critic, has spoken about his issues with food (beyond it being just high fat). i would think other things come to play here, like exercise habits, genetics, etc.

    f

  36. I'm hesitant to share this info with certain, feet-dragging, slow adopters of social media. It gives them more doubts and more reasons to ignore social media.

  37. I'm hesitant to share this info with certain, feet-dragging, slow adopters of social media. It gives them more doubts and more reasons to ignore social media.

  38. How much different is it than prospective employers searching your activities online before making hiring decisions? It seems fairly similar to me.

  39. How much different is it than prospective employers searching your activities online before making hiring decisions? It seems fairly similar to me.

  40. Secondly, consumers already use consumer ratings and reviews to make buying decisions, it's also not that much more different than what's already happening.

  41. Secondly, consumers already use consumer ratings and reviews to make buying decisions, it's also not that much more different than what's already happening.

  42. I felt this way about Blippy as well- do you really want everyone to know everything you are buying or doing? How much information is too much? How much creates an evidentiary trail that eventually, becomes an obligation to investigate, instead of just for the nosy?

    I think this is the reason for the Facebook alternative, Diaspora- people want to be able to talk openly and find like-minded friends, but (absurd made up example) might not want everyone to know they've had to join knitter's anonymous for an unhealthy attachment to cashmere. People want to share, but don't always want to be held to that information in a public forum. And too few people view everything they post online and being attached to them potentially forever.

  43. I felt this way about Blippy as well- do you really want everyone to know everything you are buying or doing? How much information is too much? How much creates an evidentiary trail that eventually, becomes an obligation to investigate, instead of just for the nosy?

    I think this is the reason for the Facebook alternative, Diaspora- people want to be able to talk openly and find like-minded friends, but (absurd made up example) might not want everyone to know they've had to join knitter's anonymous for an unhealthy attachment to cashmere. People want to share, but don't always want to be held to that information in a public forum. And too few people view everything they post online and being attached to them potentially forever.

  44. For the record, I am not commenting while driving. Really. State Farm, please make a note of that.

  45. For the record, I am not commenting while driving. Really. State Farm, please make a note of that.

  46. Small point of order, FourSquare awards the “crunked” badge for going to any four places in an evening. I earned one for going to the library and three grocery stores looking for specific ingredients (at the stores, not the library), and alcohol wasn't purchased at any. I didn't even check a bartenders guide out of the library. 😉

  47. Small point of order, FourSquare awards the “crunked” badge for going to any four places in an evening. I earned one for going to the library and three grocery stores looking for specific ingredients (at the stores, not the library), and alcohol wasn't purchased at any. I didn't even check a bartenders guide out of the library. 😉

  48. Former

    Marketing Vox found my post, and extended the conversation. See how they gave an example of how one member is suggesting a financial services firm got information about his daughter, and the only place it was from was Facebook.

    http://www.marketingvox.com/who-else-is-using-y

    Also see Rapleaf. Online reputations. This isn't much different than a credit score.

    I stand by my assertion: This is starting to happen, and will continue forward.

  49. Former

    Marketing Vox found my post, and extended the conversation. See how they gave an example of how one member is suggesting a financial services firm got information about his daughter, and the only place it was from was Facebook.

    http://www.marketingvox.com/who-else-is-using-y

    Also see Rapleaf. Online reputations. This isn't much different than a credit score.

    I stand by my assertion: This is starting to happen, and will continue forward.

  50. Sorry, Jeremiah. I don't think you understand. The fact that somebody SUSPECTS a financial services firm used a Facebook account to verify somebody's identity is 110% irrelevant. And using social media to help verify a person's identity is completely different than using it to set an insurance policy rate (or make a lending decisions, which are also typically governed by state and federal lending laws).

    Again, most insurance markets in the United States are highly-regulated at the state and federal level. How insurance companies set their rates in these markets, and what factors they use, is NOT something that they can arbitrarily change on a whim.

    I'm glad you mentioned credit scores. Again, in the auto insurance market, for example, some states do not allow insurance companies to look at your credit history as part of their rate setting. Others do. THESE THINGS ARE PERMITTED OR FORBIDDEN BY STATUTE.

    Also permitted or forbidden by statute: what insurance companies can provide discounts for. In California, for instance, the recently defeated Prop 17 would have changed the law so that insurance companies could provide a persistency discount for new customers who were previously with another insurance company. Right now, they can't. I hope you see how this works: almost EVERYTHING an insurance company can or can't do is guided by an ungodly number of of state and federal statues.

    Finally, you should understand that when it comes to rate setting, insurance companies don't have an interest in setting rates arbitrarily. The financial stability of the insurer (and almost every statute you will find) requires that rate setting be based on models that are ACTUARIALLY SOUND. In other words, that means that the insurer has to be able to associate the factor to the risk it assumes, and the price it charges.

    The “risks” section of your post basically details precisely why an insurer would never even suspect that somebody's tweets could play a role in an actuarily sound model – there is no rational basis for believing this!

    IMPORTANT SIDE NOTE

    I would point out that much of your post addresses health insurance, which is now the most highly-regulated form of insurance in the country. Ironically, health insurance really isn't “insurance” in many cases, and it certainly won't be once the full healthcare reforms go into effect.

    Already in 11 states, community rating is used in some form or another. The basic goal of community rating is to ensure that everybody pays the same rate. This means that healty individuals pay the same rate as unhealthy individuals. There is no reward for good behavior.

    You should understand that healthcare reform makes community rating the law of the land. The young will subsidize the old, the healthy the sick. Starting in 2014, for instance, you can't be denied coverage based on a pre-existing condition. And a policy's premium for a senior cannot be more than double the premium charged to young person, even though in the real world, the actual cost difference for the insurer is 5:1 and greater.

    Bottom line: healthcare reform renders your wellness-related suggestions moot. THEY ARE NOT COMPATIBLE WITH THE LAW.

    I respect that you may be a social media expert, but I think you do your firm a disservice by making industry-specific suggestions when you clearly haven't run your ideas by someone who actually has experience with the industry.

  51. Sorry, Jeremiah. I don't think you understand. The fact that somebody SUSPECTS a financial services firm used a Facebook account to verify somebody's identity is 110% irrelevant. And using social media to help verify a person's identity is completely different than using it to set an insurance policy rate (or make a lending decisions, which are also typically governed by state and federal lending laws).

    Again, most insurance markets in the United States are highly-regulated at the state and federal level. How insurance companies set their rates in these markets, and what factors they use, is NOT something that they can arbitrarily change on a whim.

    I'm glad you mentioned credit scores. Again, in the auto insurance market, for example, some states do not allow insurance companies to look at your credit history as part of their rate setting. Others do. THESE THINGS ARE PERMITTED OR FORBIDDEN BY STATUTE.

    Also permitted or forbidden by statute: what insurance companies can provide discounts for. In California, for instance, the recently defeated Prop 17 would have changed the law so that insurance companies could provide a persistency discount for new customers who were previously with another insurance company. Right now, they can't. I hope you see how this works: almost EVERYTHING an insurance company can or can't do is guided by an ungodly number of of state and federal statues.

    Finally, you should understand that when it comes to rate setting, insurance companies don't have an interest in setting rates arbitrarily. The financial stability of the insurer (and almost every statute you will find) requires that rate setting be based on models that are ACTUARIALLY SOUND. In other words, that means that the insurer has to be able to associate the factor to the risk it assumes, and the price it charges.

    The “risks” section of your post basically details precisely why an insurer would never even suspect that somebody's tweets could play a role in an actuarily sound model – there is no rational basis for believing this!

    IMPORTANT SIDE NOTE

    I would point out that much of your post addresses health insurance, which is now the most highly-regulated form of insurance in the country. Ironically, health insurance really isn't “insurance” in many cases, and it certainly won't be once the full healthcare reforms go into effect.

    Already in 11 states, community rating is used in some form or another. The basic goal of community rating is to ensure that everybody pays the same rate. This means that healty individuals pay the same rate as unhealthy individuals. There is no reward for good behavior.

    You should understand that healthcare reform makes community rating the law of the land. The young will subsidize the old, the healthy the sick. Starting in 2014, for instance, you can't be denied coverage based on a pre-existing condition. And a policy's premium for a senior cannot be more than double the premium charged to young person, even though in the real world, the actual cost difference for the insurer is 5:1 and greater.

    Bottom line: healthcare reform renders your wellness-related suggestions moot. THEY ARE NOT COMPATIBLE WITH THE LAW.

    I respect that you may be a social media expert, but I think you do your firm a disservice by making industry-specific suggestions when you clearly haven't run your ideas by someone who actually has experience with the industry.

  52. It's an interesting concept to explore (legal/regulatory issues aside). When I mash it up with Nicholas Christakis' TED presentation “The hidden influence of social networks” (http://www.ted.com/talks/lang/eng/nicholas_chri…), I think it becomes a little more interesting.

    One of Christakis' findings is that certain unhealthy factors, such as obesity, seem to cluster in social networks. Given a little information, it might be possible to extrapolate risks of some conditions (or at least risk factors) based on a person's social graph!

  53. It's an interesting concept to explore (legal/regulatory issues aside). When I mash it up with Nicholas Christakis' TED presentation “The hidden influence of social networks” (http://www.ted.com/talks/lang/eng/nicholas_chri…), I think it becomes a little more interesting.

    One of Christakis' findings is that certain unhealthy factors, such as obesity, seem to cluster in social networks. Given a little information, it might be possible to extrapolate risks of some conditions (or at least risk factors) based on a person's social graph!

  54. I don't see this catching on, and if it does there's another problem. Algorithmic-based sentiment analysis is improving and a long way from perfect. Seems like it makes sense for companies to start using human-powered crowdsourcing to determine the sentiment of tweets. For example, is the sentiment dangerous or safe. That judgement can be hard for an algorithm to make.

    Neal Mueller / Crowdflower

  55. I don't see this catching on, and if it does there's another problem. Algorithmic-based sentiment analysis is improving and a long way from perfect. Seems like it makes sense for companies to start using human-powered crowdsourcing to determine the sentiment of tweets. For example, is the sentiment dangerous or safe. That judgement can be hard for an algorithm to make.

    Neal Mueller / Crowdflower

  56. Very interesting observation to find sentiments behind tweet by algos, i think you need manual work force to monitor that

  57. Very interesting observation to find sentiments behind tweet by algos, i think you need manual work force to monitor that

  58. What a total bunch of crap. I have 40 yrs. of experience in the insurance business and insurance companies are NOT using social web sites to “spy” on their customers. Next, the author will be telling us that the sky is falling, lol

  59. Social media experts are everywhere these days. Unfortunately most of these so called experts are great at telling us what to do but have never done anything themselves. The most recent example is a column by Jeremiah Owyang an industry analyst for the Altimeter Group. (translation: someone who tells us what we should do but who has never done it himself). In his latest expert advice insurers are going to monitor social media and base their health coverage and rates on what we post. I wonder what the atmosphere is like on the plantet he lives on ?

    According to Mr Owyang:

    Conclusion: Expect Companies to Offer Opt-In Programs for Social Insurance Rates

    I would expect health and insurance companies to offer an opt-in method for existing wellness programs to be extended to tools like online education courses, participating in wellness programs with peers (like Nike Plus) or allowing members to submit location based checkins to the gym, healthy eating, and other pro-health activities. We should expect that a forward-thinking insurance or wellness company offers an online incentive based program to encourage members to connect to each other, become more educated, and live a healthy lifestyle.

    There are a bunch of holes in his conclusions but I™ll just tackle the big ones;

    With insurers insuring millions of people can you imagine the resources needed to monitor their customers via social media ?
    A lot of people do not use social media to tell people I just went to the gym or I had a healthy salad for lunch.
    It would be easy for someone to drive by a health club and check in to fool people into thinking that they have been there.
    Only 4% of the online population uses their mobile devices to for location services.
    Insurers, despite their complaints, are making money hand over foot right now as less people seek medical care or go to their physicians.
    This is the kind of rubbish that I would expect from someone who spend his life analyzing and never doing anything. These are the social media experts who tell marketers that they should be doing this or that but when it comes to successful programs they have done their resumes are usually null and void.

    Social media gurus too often oversimplify the management challenges of implementing asocial media program. Certainly, people who have good ideas and communicate them well can help organizations. But a focus on gurus masks how business knowledge is and ought to be developed and used. Knowledge isn™t generated by lone geniuses who magically produce brilliant new ideas in their gigantic brains. This is a dangerous fiction. This happens partly because consultants and others who sell ideas and techniques are always rewarded for getting work, only sometimes rewarded for doing good work, and hardly ever rewarded for whether their advice actually enhances

  60. Thanks for the thoughtful comment Richard

    I just updated the post, as there's an article in NYT showing how some insurers are starting to experiment with this data (some from social networks) now.

    I'm open to the dialog, appreciate the time you took to write the comment.

  61. hmmm, i don’t think it makes sense to use social media in order to set insurance policy, because not all teh information can be seen on facebook.

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