Will Your Home Insurance Provider Jack Up Your Rates If Your Tweet Appears On PleaseRobMe?

Too Much Free Time

from the welcome-to-social-media dept

Tue, Mar 2nd 2010 11:22am — Mike Masnick

We were just recently discussing the phenomenon of sites like "PleaseRobMe," which reposted Twitter/FourSquare messages of people announcing that they had left their homes, and wondering if it was all just a moral panic. It seemed unlikely that any burglars were seriously using such sites as a way to pick homes to rob. But do insurance companies agree? Michael Scott points us to the news that at least some insurance providers are exploring social media usage in figuring out insurance rates. Right now, it appears that they're mostly looking at social networking info in doing claims investigations, but it may soon go beyond that. The author of the linked article suggests that at least some insurance companies are looking to take it further, in looking at your social media usage to determine your risk level (and, eventually, your premiums).

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Filed Under: insurance, social networks

35 Comments

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Anonymous Coward, 2 Mar 2010 @ 10:55am

That could prove to be troubling.
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Skeptical Cynic (profile), 2 Mar 2010 @ 11:40am

The law of unintended consequences...
Let the world know what you are doing and the world will use that information. For good or bad. Hehe!! Go ahead spread the word!!
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Anonymous Coward, 2 Mar 2010 @ 11:42am

This is just a tax on social media. It's basically saying, "if you want to freely use use social media the way you want you must pay us a tax." It has nothing to do with how that social media affects your likelihood of getting robbed since it doesn't really make a difference anyways.
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Anonymous Coward, 2 Mar 2010 @ 11:55am

This seems like a generalizing metric that will be badly abused by the insurance companies.

You are younger and are more likely to use social networking sites, and thus more likely to advertise that you're not home. Up your rates!

You have a few teenagers. They are likely to use social media sites....UP YOUR RATES!!!
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matt, 2 Mar 2010 @ 12:07pm

Thoughts from a property/casualty insurance underwriter
The carriers are unlikely to react to social media unless such data is actuarially sound. The problem here is measurability and identity/information verification. It seems especially difficult to quantify risk based on social media usage. Credit scoring offers a simple, actuarially-sound method of evaluating and pricing risk. I cannot think of how to translate that to "social media usage."

That being said, I think the prevalence of location data could facilitate crime. If my profile were public and I put up a post saying "Off to our honeymoon in Hawaii for two weeks!", one could easily see that, punch my name into county assessors searches, find my exact location and be safe knowing they have lots of time to rifle through my stuff.

There was a similar case in my area just this week. Someone had their house listed for sale (very nice place) and the online real estate listing included a lot of photos of media room and big ticket items. The house was broken into while the residents were there, and shots were fired by both burglar and homeowner. The police suspect the burglar staked the target using the real estate site.

I don't think it's an issue of utilizing such data to quantify and price risk, which logistically seems very difficult. The issue should be fostering an environment of increased awareness that publicly-posted information can increase risks to your person and property.
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Anonymous Coward, 2 Mar 2010 @ 12:12pm

"It seemed unlikely that any burglars were seriously using such sites...."

Rubbish. Burglars are definitely more ingenious than a Masnick at their own chosen profession at using twitter doesn't require much ingenuity.
If the Masnicks can't figure it out that's their problem !.
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Anonymous Coward, 2 Mar 2010 @ 12:15pm

Re: Thoughts from a property/casualty insurance underwriter
I don't know if it'll be based so much on risk as it will be on profits. (some) People are willing to pay more to have insurance and use social media than not to, regardless of whether or not using social media adds any risk.
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Hulser (profile), 2 Mar 2010 @ 12:22pm

Re: Thoughts from a property/casualty insurance underwriter
The carriers are unlikely to react to social media unless such data is actuarially sound.

And why is this? Maybe I'm being too much of a skeptic here, but the actual actuarial soundness of the justification to raise someone's rate would seem to pale in comparison to the perceived soundness. In other words, who's going to stop them from raising your rates and saying it's because "Your risky use of social media invites robbers into your house".

Is there some government regulation that that the risk factors have to make sense? And even if there is, aren't these factors ultimately subjective?
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Sean T Henry, 2 Mar 2010 @ 12:33pm

Re:
No it could be fun. Use it to game the system. Post messages such as just left my house after arming the security system that has CCTV cameras, I hope my German Shepard, and Pitbull will behave today.
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yozoo, 2 Mar 2010 @ 12:41pm

Sure
If they can establish your more likely to be robbed
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Ryan, 2 Mar 2010 @ 12:43pm

Re: Re: Thoughts from a property/casualty insurance underwriter
who's going to stop them from raising your rates and saying it's because "Your risky use of social media invites robbers into your house".

You cancelling your policy and/or others not purchasing one in the first place. If they price the premiums too low, they will take a loss in the long run. But if they price them too high, competitors that more accurately gauge the actual risk will undercut them.

Otherwise, why do they even have to suddenly use social media as an excuse? They would have just bumped the rates up long ago.
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simplicityc (profile), 2 Mar 2010 @ 12:54pm

My insurance underwriter looked at my online photos when I applied for life insurance.
A year or so ago I applied for life insurance.
I was very surprised to get questions from the underwriters regarding travel I have done a few years before.
The only place they could have known about these travels were through pictures I posted online. This was nothing crazy or dangerous but they looked me up online, and found pictures with titles and realized I traveled a bunch a few years before that.
It was not a big deal and did not affect my rate at the end of the day but it was very interesting to realize how these companies work.
In general if you post something publicly people and companies will treat it as public knowledge.
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NAMELESS.ONE, 2 Mar 2010 @ 12:58pm

better question
will the insurance company demand a video camera up my rectum so it can tell where and when i go somewhere and everywhere i sit, so as to better tell what im up too.
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Hulser (profile), 2 Mar 2010 @ 1:06pm

Re: Re: Re: Thoughts from a property/casualty insurance underwriter
You cancelling your policy and/or others not purchasing one in the first place.

I think insurance companies know better than anyone exactly how much they can get away with without driving their customers away. So, if they can bump up the rates even by a little bit and "justify" it with some mumbo jumbo about social networks, they'll do it. Their own actuarial charts will tell them where the break even point for profitability is. Would this be fair? Most people would say no even in a healthy competative market where people have the choice to switch insurers.
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MAC, 2 Mar 2010 @ 1:07pm

Idiots!
People who do this are no different than those that post naked pictures of themselves, compromising or damaging information or attack others on the internet.

If you are stupid enough to do something idiotic that will 'live forever' on the servers then you will get what you deserve.

A rotten job, no dates, and burglars at your house...
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Anonymous Coward, 2 Mar 2010 @ 1:17pm

Re: Re: Thoughts from a property/casualty insurance underwriter
They are not subjective. The P&C industry is heavily regulated on a state-by-state basis. To keep the credit scoring comparison, it's not too tough to segment loss data into credit score brackets. So the bottom 10% might get declined or surcharged, the middle % are neutral and the higher % are credited. There are definitely those who do not believe credit scoring should be used in determining insurance premiums, but the fact is there is strong actuarial correlation between credit scoring and loss activity. Other rating factors are dwelling age, construction type, proximity to the coast, hail maps, upgrading if an older building, age/type of roof surface, etc- quantifiable metrics not subjective.

My point was the "social media usage" metric would seem to be highly subjective and not measurable or verifiable. So I would be curious/surprised to see an accurate/effective implementation.

Plus, a poorly thought out implementation would be certain to attract negative political fallout.

Most people do not understand that property/casualty insurance is very difficult to write profitably. A "combined ratio" of 100 means for ever dollar of premium the carrier paid a dollar in claims & expenses. A combined ratio of 118 means for every dollar in premium the company pays $1.18 in claims & expenses. A combined ratio of 90 means 10% underwriting profit and is a most excellent result.

The market is so fiercely competitive (and has been "soft"--meaning premium trending downward- for a record amount of time) that it isn't insurers sitting around counting piles of money- every company is struggling to remain competitive without incurring an underwriting loss.
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Ryan, 2 Mar 2010 @ 1:41pm

Re: Re: Re: Re: Thoughts from a property/casualty insurance underwriter
It doesn't really matter economically what their justification for it is - it's basic supply and demand. In a competitive market(which to my understanding this is), the equilibrium price is the profit maximization point. If one firm tries to bullshit consumers about social media, others will undercut their business for a higher market share in the long run. If this basic tenet isn't fair then nothing is, because this is pretty much rule #1 of economics.
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Anonymous Coward, 2 Mar 2010 @ 1:49pm

Re: Re: Re: Re: Re: Thoughts from a property/casualty insurance underwriter
"It doesn't really matter economically what their justification for it is"

So then can stores sell you food for more money just because you make more money without any justification? I think there are some factors that businesses should not be allowed to discriminate against just because there are some things that we value more than economic efficiency. Also, I highly doubt that we have a perfectly competitive market either, the government usually ensures that regulations favor the incumbents. It can hardly be argued that the insurance industry is a competitive market.
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Alan Gerow (profile), 2 Mar 2010 @ 1:57pm

Not a day goes by I don't read stories like "person tweets they're running errands and comes home to an empty house!" It's such a rampant problem that it overshadows all other news stories. It took me three weeks to hear of Micheal Jackson's death because of all the coverage regarding social media inspired break-ins. It's a plague¡

Wait, there are no stories ... because it's not a problem. Just opportunistic insurance companies playing off of media fear mongering.
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rabbit, 2 Mar 2010 @ 2:04pm

Re: Thoughts from a property/casualty insurance underwriter
Credit scoring offers a simple, actuarially-sound method of evaluating and pricing risk.

i laughed so hard i pee'd my pants.
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Mike Masnick (profile), 2 Mar 2010 @ 2:10pm

Re:
Rubbish. Burglars are definitely more ingenious than a Masnick at their own chosen profession at using twitter doesn't require much ingenuity.

*Sigh* I didn't say they weren't using it. I said such sites weren't particularly *useful*. If you want to know if someone's going to be out, it's better to watch their house or learn their usual pattern. You know what works as well as Twitter? Calling their home.

Sure, burglars can use Twitter, the question is of what value is it, and I'd argue very little compared to alternatives.
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Ryan, 2 Mar 2010 @ 3:41pm

Re: Re: Re: Re: Re: Re: Thoughts from a property/casualty insurance underwriter
Stores can sell you food for more money because your daddy banged your mama. How would you even know why they raised them? Maybe gas stations raise their gas prices because they don't like seeing black people driving cars, who knows. Either way, gas prices fluctuate for one reason or another.

The point is, people won't buy the higher-priced product when they know they can get the same thing elsewhere for cheaper. It's economics, or else they'd just raise their prices 5000% and retire in a year. It doesn't have to be a perfectly competitive market; there just has to be competition, transparency, and inhomogeneity to some degree.
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Ryan, 2 Mar 2010 @ 3:43pm

Re: Re: Re: Re: Re: Re: Re: Thoughts from a property/casualty insurance underwriter
*homogeneity. Which isn't even really the case, people will compare different things based on a common standard of value.
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Anonymous Coward, 2 Mar 2010 @ 3:46pm

Re: Re: Re: Re: Re: Re: Re: Thoughts from a property/casualty insurance underwriter
you still missed the point being made regarding discriminatory pricing.
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Anonymous Coward, 2 Mar 2010 @ 3:47pm

Re: Re: Re: Re: Re: Re: Re: Thoughts from a property/casualty insurance underwriter
"It doesn't have to be a perfectly competitive market; there just has to be competition, transparency, and inhomogeneity to some degree."

and to what degree is that, why that degree, and what degree do these characteristics exist in our society and please provide evidence.
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Matt (profile), 2 Mar 2010 @ 3:57pm

Re: Re: Re: Thoughts from a property/casualty insurance underwriter
Further to this, insurance underwriting is immensely regulated, and only certain measures are permissible in ratemaking. In other words, depending on the state and the regulatory body a metric like "use of social media" may have to be approved before it can be used in setting premiums. If there is no demonstrable actuarial basis for it, such approval may be hard or impossible to obtain.

Also, there must be a means for collecting the information. For most risks, that would be prohibitively expensive. It hardly makes sense to hire a PI to find your twitter name and analyze your postings for the last year for a few hundred $$ in premium. It makes much more sense on the backend, when you are adjusting a $30,000 claim for missing A/V equipment and jewelry.
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Anonymous Coward, 2 Mar 2010 @ 4:00pm

Re:
The fact is that this insurance scam is equivalent to ISP's wanting to charge more for people who use more bandwidth. It has nothing to do with lowering the prices for everyone else, it never has lowered the prices for anyone else, and they just want to leverage the government sanctioned lack of competition to scam the public.
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Sos (profile), 2 Mar 2010 @ 6:07pm

Likewise...
Will they lower my car insurance rates because I twitter that im taking my bike, or public transport?
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Anonymous Coward, 2 Mar 2010 @ 6:25pm

Re:
Why would a crook bother with B&E for simple household goods when they can sit at home with a beer and chips whilst they raid everyones 401k?

Wake up man
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Jamie Carl (profile), 2 Mar 2010 @ 11:09pm

I'm just going to tweet that I've left the house every morning, then walk the 15 paces to my office on the other side of the house. With any luck some douchebag will try and rob me and I'll get some entertainment out of kicking their ass.
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Emmanuel Carabott (profile), 3 Mar 2010 @ 3:47am

I think its to be expected. Insurances use any excuse they can imagine to rise premiums and avoid claims. I personally believe there is some risk in the use of social networking if the user doesn't consider carefully what he is sharing. broadcasting your Location is one thing. Worst would be the habits one can infer from those locations. What about happily sharing how your spouse bought you this expensive ring or how you bought this expensive TV? I don't think a thief will sit down and watch you twitter when you're out to spring into action, but searching through twitter to find a target? I think its possible! I might even call it the modern day dumpster diving really!
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Anonymous Coward, 3 Mar 2010 @ 5:22am

I think they will jack up your rates no matter what. They may atempt this scenario as a rationalization
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Cloonie, 16 Jun 2010 @ 8:02am

LOL, funny. They should make a similar thing for auto insurance companies, aka people twittering they just left their car, and where they parked it. What the hell is the point of twitter anyway?
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kiroshimasylvia, 18 Jun 2010 @ 8:53pm

Home Insurance
I think that you need to check and see, my understanding is that flood insurance is available. One of the problems that the public may encounter is an agent that has not been to flood insurance education to sell it. That might have alot to do with it.. I think he said the other day that 33% of the claims for flood, were not in the flood plain. But, most people will not buy due to paying another premium….
============================================
Home Insurance
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Tina, 4 Nov 2010 @ 12:07pm

Invasion of Privacy...Maybe?
I think this would be taking an investigation to far. I live in an apartment and have been robbed before. Came home one day and NOTHING..even the apartment sofas were gone. But, I can't imagine the insurance company coming and using social media against me?
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