Insurers Scouring Social Media

I sure am glad my insurance company never knew about some of the stupid and dangerous stuff I did when I was younger. But for the lack of online social media at the time, they would have. Because that is exactly the kind of stuff people post to Facebook, Instagram, etc. And insurers are taking notice.

"We're going through a period now where most life insurers are exploring using all types of data, not just data they get directly from the customer proactively, but other external sources of data—social media being a big one," said Ari Libarikian, a senior partner at McKinsey & Co. in New York.

This sets up another case of efficiency versus privacy. States are now setting the rules on what information is permissible to use. New York state appears to be requiring that insurers prove that any social-media data used in underwriting is actuarially justified, logical for use and doesn't unfairly discriminate against certain customers. I have long claimed that the main reason people value privacy is so that they can engage in moral hazard and adverse selection.