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More often than not, insurance companies only rely on social media when working on fraud cases. Leveraging social media data has never been illegal, but it has presented some privacy concerns. With newer and newer technologies, insurance companies can better understand the data they get from social media, allowing them to make well-informed choices to develop the right solutions such as underwriting.
One of those technologies is AI. AI allows the process of collecting and verifying data to complete much quicker and in a more straightforward manner, so much so that it may enable companies to integrate such social media feeds into everyday activities.
That being said, there are pros and cons to using social media data for insurance activities. This article will tackle those pros, cons, and how you can leverage such data.
1. The pros of social media data
The biggest pro of using social media data is that the policies can be issued much faster. It also means less time wasted working with customers and clients and more time getting policies out. Some also even believe that social media data is much more accurate compared to actuary tables. After all, activities such as drinking and the like are much more identifiable, just because their social media account generally reflects their lifestyle.
2. The cons of social media data
The main con of using social media data when giving out policies is that the insurer themselves are accountable for their decisions. They have to be careful not to participate in discrimination activities, which can be tough to do when the main goal is to send out as many policies as possible. Also, social media data, in reality, is not 100% accurate.
For example, when it comes to alcohol, an individual may be sober for most of their lifetime. However, if they work in a bar, they may seem like they drink more than they actually do. Such instances can lead to false-positives that can cause plenty of trouble to the insurer because the policy was made from false information.
3. How to leverage social media data
The list of pros and cons is never too clear, but one way to stay out of trouble is to be transparent about how you utilise social media data. When a client or customer knows you rely on said data to make your policies, they understand what they are getting into working with you. This process includes clearly outlining what kind of information you search for, how you use it, and how it affects the policies.
Transparency may not eliminate all the trouble, but it does put your insurance firm in a good light. When you show the rationale behind what you do, your customers can learn to trust you more—especially if they see that your best interest is to give them the best policy possible.
In other words, transparency is a way to protect your reputation. That being said, when using social media data, take it with a grain of salt. If possible, communicate with the client or customer and discuss the information thoroughly. This way, you can reach a solution that makes you and your customer happy.
Informatics is a custom-software development agency specialising in infrastructure solutions and services to help businesses create reliable processes supported by the latest technologies and techniques. If you are looking for insurance software solutions to support your firm, work with us today!
Written by Daniele Paoletti