Social Media Has Changed How Insurance Companies Decide Your Premium

Social Media Has Changed How Insurance Companies Decide Your Premium

Three Tips On What To Do About It

Few technologies have impacted the world on such a large scale. The television allowed people to see the world in their own homes that claims reminiscent of the Internet were made. The Internet not only allowed instant worldwide communication and the ability to start a business from home, it changed banking, education, music, movies, long-distance telecommunications and so much more.

Now, social media has made the world so small, one can get a more accurate profile of a person online than any résumé or application could offer. This has led to employment and university-application background checks, and now, insurance companies deciding one’s premiums based on one’s posts.

In an article in the Wall Street Journal titled, New York Insurers Can Evaluate Your Social Media Use—If They Can Prove Why It’s Needed and another on Huffington Post titled, Do Insurance Companies Look at Your Social Media Profiles? the trend is obvious. Here are three things you can do to ensure you get the best rate.

The Realities of Insurance

For you to understand what to do with the following three tips, you need to understand (in general) how insurance works. For insurance to exist, it must be a win-win situation: they win by charging appropriate premiums which they invest to make grow for the eventual day when, you win by receiving the monies you could not save but are provided in the event of a catastrophe because of your monthly investment (premium).

However, not everyone with the same generic demographic is equal. Two people who are aged 25, 6-feet tall and 200 lbs. are NOT the same risk. Insurance companies are selling risk management, if you will.

Good risk bad risk

One might be a smoker, while the other a skydiver. One may live in a low-crime area while the other in Chicago (‘nuff said). One may work in an office as an auditor; the other may work in construction. All these things determine the risk the insurance company takes. If it takes 20 years to pay a claim, the invested premiums more than cover the claim and provide a nice profit. If it does so in two years, well, that’s the risk.

An insurance underwriter (the one who decides what the risk should cost or whether it’s worth taking on the risk) will look at everything to decide what the actual risk may be. And, while I would like to think most people are honest, there are some who would not disclose information or soften the truth in order to save a few bucks.

Social Media: An Underwriter’s Dream

Most people, until recently, thought social media meant anonymity. After all, they could make it private, by invitation only. The problem is if one person whom you shared with is not private, it is discoverable by anyone searching. Plus, if you thought you could post an image in some secret account under a pseudonym, facial recognition will find it and link it to your real name.

Therefore, if you posted party pictures with alcohol, smoking, mentioned drugs or unprotected sex, shows you skydiving, motor crossing or any other dangerous sport you chose not to mention on an application, chances are good the underwriter will find out. This will paint a realistic picture of the life you lead and what inherent risks they may be taking on or choose not to.

What Can You Do About It?

The first thing to understand, you cannot totally remove everything. Once on the Internet, always on the Internet. With that said, however, you can make it difficult to find.

Remove unwanted posts and pictures

First, you want to delete anything that could paint a risky picture. While you may think a photo of you doing a tandem jump from a plane is cool (and it is… my daughter did it… the word CRAZY comes to mind, but I digress), while there’s nothing wrong with it in general, an underwriter may beg to differ. When in doubt, delete it.

Then look for posts where you wrote things you did. Tweets, comments, etc., in a moment of excitement or trying to impress can hurt you.

If You’re a Business Using Social Media

Many businesses have come to allow employees to use social media as brand ambassadors. This sounds great until you get an out-of-control employee posting things that create a public relations nightmare.

Another thing to consider is what are they posting personally? You may think, “That doesn’t affect my business,” but, if you’re looking for business insurance, an underwriter is going to consider what an employee may do on company time that would be a risk. So, you may consider whether to allow this practice or not, for both PR and insurance reasons.

Bury Old Posts Under New Ones

BloggingOnce you’ve cleaned up your landscape, as I wrote previously, many things will still be found. For example, archived posts and images, things shared with others which you can no longer control, and things forgotten and missed. There are tools that will do a deep search of the Internet and for a fee, remove unwanted information.

But another thing you can do is post new stuff! If you’re a business, a good reason to start blogging and doing a social-media campaign. You see, with the sheer volume of information on the Internet, the average person won’t go past page two. A determined searcher may go to page five. An underwriter may go as far as page 10. Therefore, the more active you are with good content, the deeper the old will be pushed down into the nether-pages of search returns and/or social-media feeds.

If you’re not in the market for insurance, this is still a good practice. Why? Career advancement opportunities, university enrollment, reputation management and possible bad public-relations fodder. After all, Kevin Hart said the things he said 10 years ago and it cost him hosting the Oscars. You may not remember what you posted 10 years ago, but I guarantee the Internet does.

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