The use of social media data by insurers to cherry pick customers and price risks has been back in the headlines this month. First, privacy campaigners forced Facebook to stop Admiral using posts to assist in pricing motor insurance. Then the FCA weighed in announcing a policy review on the use of what they still quaintly call “Big Data.” To quote Andrew Bailey, FCA CEO …”Insurance affects society and draws upon the data from it. Understanding the effect and significance for insurance of Big Data and how it evolves requires a clear framework to disentangle the issues”. Cue those privacy campaigners again!
Taking time off from worrying about these issues du jour and turning to my usual preoccupation of finding someone to stand me a decent bottle of red wine, I found myself at a splendid dinner on Friday night sitting between Dr Daniel Reardon, CEO of Fitness Genes and Andreas Weigend, former Head of Data Science at Amazon. We quickly discovered that I was the only one of us who had not written a book!
Fitness Genes use a combination of your DNA and lifestyle data to make evidence based recommendations on the type of diet and exercise strategies you need to fulfil your health goals. A very scientific approach to health and fitness that would, or perhaps should, be of enormous interest to life insurers. More about them and genetic predisposition another day.
Andreas is now a free spirit and about to publish a book called Data for the People and its right on the use of social media zeitgeist. As you would imagine for a former Amazon man, he’s a great advocate of the power and importance of this data and makes some great points in the book. As I’m not yet a published author, I’m using his words not mine –
“Every day, as you browse the internet and carry your mobile phone, you create and share data about yourself. This data of the people and by the people is the most important economic resource of the twenty-first century, as important as oil. And as with oil, the real value comes from refining that raw material.
In Data for the People, I show that it's misguided to fight for a naive conception of privacy or anonymity; that would mean giving up many of the products and services you've come to depend on”. And if that included properly priced insurance based on your digital traces, why would you want to give that up?
But even Andreas would advocate the need for some rules, and these are his and I’ve not seen any better articulation anywhere else - “…take an active role in extracting value from your data, especially as more data comes from social networks and sensors.
To ensure your data is being used for you and not against you, you must demand a seat at the controls of the data refineries”. He argues that every refinery should provide you with a data "hygiene" dashboard including measures of expected risk and return on data shared. He outlines five tools that reward data creators with more decision-making power:
- the right to export data,
- the right to amend data,
- the right to blur data,
- the ability to "dial" personalisation up and down,
- and the ability to see how changing inputs affects outputs.
He then explores the trade-offs you will face in commerce, finance, work, health, education, and governance, showing how, with these controls in hand, you will be able to get as much out of the refineries as you give. I guess it's easier said than done, but if achievable, that's the win win.
So, as I write I’m awaiting both for my pre-ordered copy of Data for the People (for yours go to https://www.amazon.com/Data-People-Make-Post-Privacy-Economy/dp/0465044697) and my DNA test kit from Dan at Genetic Fitness. I’m rather hoping that I have a genetic predisposition that requires me to drink fine red wine every evening to stay healthy and live long. As I very much doubt it, I’ve taken a measures to ensure my digital traces don’t drive my life insurance premiums up – I’ve stopped buying my wine on line!
Every day, as you browse the Internet and carry your mobile phone, you create and share data about yourself. This data of the people and by the people is the most important economic resource of the twenty-first century, as important as oil. And as with oil, the real value comes from refining that raw material