Social media is commonplace.
Most people don’t think twice about updating their Facebook and Instagram whenever they do something fun, have a strong opinion or they really like the way their dinner looked.
Your prospects and clients know that filtering what they post so that their employer doesn’t get the wrong impression makes sense. Or do they?
But they probably don’t know that their online presence is fair game for their life insurance companies – and may negatively affect their life insurance premiums.
Play a helping role
Make yourself a valuable asset to your clients and prospects, and let them know that their social media activity could impact their life insurance costs.
Now, it’s been standard practice for insurers to use “non-traditional” public data when making underwriting decisions, including motor vehicle records, credit scores and court documents.
While they don’t necessarily check your latest Instagram post (some might for high-profile clients), some states are beginning to put guidelines in place around using this information in an effort to ensure discrimination doesn’t come into the picture.
Here’s what your clients need to know.
Underwriting and algorithms
The process of purchasing life insurance can take a while and it can also feel invasive.
Filling out the application and answering questions about smoking and other lifestyle habits can be uncomfortable – especially if your prospect has to undergo blood tests, a urinalysis and ECGs.
Certain algorithms are used to make the process flow more quickly. For example, sometimes the algorithm will flag someone so that they don’t have to go through the testing.
This generally results in a quicker underwriting decision for you, as the producer, because people don’t have to wait as long for their policy.
To put it simply, algorithms are good for sales.
Potential for discrimination
Premiums cannot be determined by factors such as race, religion or sexual orientation.
It’s the insurer’s job to make sure that the information used to create the algorithm isn’t discriminatory.
One way to tell is by looking at the results.
For example, if you can reasonably predict the premium amount by using race (a protected attribute), then it’s a skewed algorithm.
Transparency is important.
Life insurance companies should assess their vetting process by asking questions such as:
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What kind of data do they use?
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Why do they use this particular data?
Companies should be able to show that they tested for bias and what considerations were made.
As a trusted advisor to your clients, you should be telling them when insurance companies are using a new algorithm and how it may affect their premiums.
When is it okay to charge some groups more?
This is a question that’s still being considered.
For example, should your clients’ rock-climbing Instagram pictures mean they should pay a higher premium?
What if they checked the box “non-smoker” on their application but their Facebook pictures frequently show them with a cigarette in hand?
These are issues that you should be talking through with your prospects and clients.
Keep your life insurance clients in the know
New York’s new protective law will surely be followed by other states with their own guidelines for how algorithms can affect individual premiums.
Your role is to make sure your clients and prospects know what’s happening and that you’re transparent about what parts of their lives may have an effect on their premiums.
How are you already preparing your clients for the future?
