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Dawson and Rosenthal
Dawson and Rosenthal

Insurance companies know more about you than Facebook

Facebook got into hot water because the personal data of 50 million users was utilized by Cambridge Analytica and notably sold to the Trump campaign in 2016. It’s believed that this allowed the campaign to identify the personalities of users and then influence their decision-making process and behavior.

While this is considered scary to many Facebook users, insurance companies know even more about its customers, including such important data as:

  • Age
  • Marital status
  • Value of your home
  • Education
  • The condition of your health (for life insurance)

Insurance companies use this information so they can make educated decisions about coverage of its customers. In their eyes, this information allows carriers to properly calculate risks and therefore rates, thus avoiding billions of dollars in losses.

Using AI to make decisions

According to CBS News, the providers are keeping step with modern tech developments by using artificial intelligence (AI) to get a more accurate and nuanced read on customers and potential customers, and thereby increase their profits. The use of AI enables insurance companies to delve into the minutia of customers’ lives that help them determine such client tendencies as what makes them buy insurance, what makes them hold onto it if it is no longer the low initial rate offered, and who is too risky to cover.

AI does this by crunching traditionally gathered information as well as other tendencies, including:

  • The buying habits for such flagged products as alcohol or tobacco
  • The driving habits because insurers can now easily track modern vehicles through onboard GPS (because customers allow them to do so in order to get a lower premium)

Connecting so manydisparate dots

Drawing upon Census data, AI can take a change in circumstance (such as a residence in a more upscale neighborhood) and then determine the customer is more likely to buy more life insurance. If the economic change is downward and the policyholder is economically vulnerable, the company can potentially cancel the policy, reject a claim or raise the premium. The insurance companies also now have the ability to get accident report information in minutes sometimes with corresponding video of the accident. This means that they can potentially make a decision on a claim before it is even filed.

The customer does have recourse

The companies’ use of artificial intelligence tips the scales in favor of the provider. A bad faith life insurance attorney knowledgeable in the rules insurance providers must comply with can be help to protect clients from unfair treatment regardless of what the AI metrics tell them. Individuals are often well served when they contact an attorney because they feel the company has unfairly rejected a claim or not paid the proper amount.