Social media postings have been a source of data collection for some time now. Employers often refer to social media postings when making hiring and firing decisions. Police investigators have relied on information gathered via social media to secure criminal prosecutions. Advertising groups have gathered consumer information from social media postings in order to determine what’s hot. But, there is another industry that is watching our social networking and analyzing data . . . the insurance industry.
For a few years insurance companies have been reviewing posts, photos, comments and other information available on social media sites like Facebook and Twitter to investigate possible inflated or even fraudulent insurance claims. Insurance investigators, who once followed claimants with cameras in an attempt to catch them doing something inconsistent with their claim, can now sit at their desks and peruse the internet to determine the validity of certain claims.
Consider the following example: Joe Worker filed a worker’s compensation claim alleging an injury to his leg which keeps him off work and for which he collects applicable benefits. The insurance investigator snoops around and sees photos and posts on Facebook about Joe Worker engaging in a marathon while he was collecting benefits. Obviously, a red flag is appropriately raised. But, what if the photo or post was faked? What if it was an old photo that was simply posted recently? What if such a photo only demonstrated that Joe Worker was there supporting friends and not actually running? Evidence gathered on these sites should only be used as a guide, not as definitive proof of fraud.
Perhaps even more controversial is the idea of insurers using social media to develop risk profiles when underwriting insurance policies. Currently, insurers aren’t developing social media scores en masse because state insurance commissioners have not yet set standard guidelines regarding the use of social networking data. However, you can be sure that there are still individual underwriters who are reviewing various social media sites to determine how risky prospective insureds may be. Are they seen smoking cigarettes or drinking on Facebook photos? Are there comments being posted which would leave one to believe a prospective insured engages in activities like sky diving or hang gliding?
Eventually, we can expect that regulations will be in place and insurance carriers will be using data from social media sites in a very aggressive fashion to underwrite policies. When that time comes there are already some protective measures in place. For instance, insurers cannot use data that would cause them to discriminate in rates and underwriting based on race, gender, or religion. However, as with credit information, financial data can be used legally by underwriters to calculate insurance premiums even though such data may often impact different groups of people disparately.
More importantly, the Fair Credit Reporting Act would likely apply to the insurance companies’ social-media risk analyses. If this data is subject to the FCRA, then an insurer who takes an adverse action based on this data would have to disclose it to the prospective insured. Such an adverse action under the FCRA is defined as the “denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, existing or applied for, in connection with the underwriting of insurance.” This would mean that consumers could challenge any negative use of social-media data. But it would not mean that such uses would be prohibited. That would be up to state legislatures and regulators.
The problem with all of this is the possibility of misinterpretation. What is posted on a social media site is not necessarily the reality of things. If Jane Lovely “likes” the American Cancer Society’s Facebook page, it doesn’t mean that she has cancer. If Fred Smith is in a posted photo showing him holding a gun it doesn’t necessarily follow that he is a hunter. But, these are the types of implications that could potentially arise if that kind of data is used to prepare a “risk analysis”.
The thing to remember is that it would be wise to utilize the highest privacy settings available for your social media profiles, discourage friends from posting photos or comments without your approval and be very careful of what you post and how consider how an outsider may interpret it.