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In a Few Years, Social Media Data May Be Common in Underwriting

Did you post pictures of a keg party you hosted on your Facebook page? Or pictures of that new rottweiler puppy you adopted? Did you...
October 18, 2011

Did you post pictures of a keg party you hosted on your Facebook page? Or pictures of that new rottweiler puppy you adopted? Did you tell your friends in a post that there's a stress crack in one of the walls in your home, but you're not going to file a claim because you don't want your insurance company to find out about it and raise your rates?

The insurance industry is paying increasing attention to what people and businesses post on social networking sites like Facebook, Twitter and LinkedIn, according to a new report from Boston-based research firm Celent titled "Using Social Data in Claims and Underwriting." Currently, social network data are being used as sources of evidence in courts of law in claims cases. Individual underwriters are retrieving risk evaluation information on their insureds through manual searches on social sites.

Use of social data is still in its formative stages, but it's developing rapidly. Celent predicts that over the next three years, social data will be "incorporated into core underwriting and claims processes" and become standard inputs into risk evaluation and settlement activities. Celent contends that social data has the potential to join existing third party data sources such as CLUE (Comprehensive Loss Underwriting Exchange), motor vehicle reports, and MIB fraud reports to enable more accurate underwriting evaluation and pricing, and lower claims costs.

State regulators have not yet offered official guidelines in terms of overall use of social data, but that could change. Regulations aside, users of social media should remember that the things they post on a wall to share with their friends is public, not private, and can constitute data that could be used against them.

Read the entire article on social media data and insurance underwriting: Social Network Data May be Used in Underwriting (Insurance Journal 10/13/2011)