How social media affects your insurance claims

Anything you post on social media can be used by insurers, within reason.

social mediaCan an insurer use information collected from your social media posts to assess your risk profile and verify claims? This was the question posed by Maria Philippides, director at law firm Norton Rose Fulbright at a recent insurance seminar and highlights the rights to privacy we give up when we take to social media.

According to Philippides, big data, which is made up of all the public information available about us, provides companies with a great deal of information about their clients. They can assess where we shop, where we drive, what medication we take and how much we exercise. When we sign up for loyalty or incentive programmes, that is effectively the information we hand over. When we start posting on social media, that information moves quickly into the public domain and we have very little control over its dissemination.

Although much of this information is available to insurers, South African law does apply certain limits. Philippides says the equality act prevents an insurer from unfairly discriminating against someone based on gender, pregnancy or age for example, “so an insurer can only use ‘big data’ to tailor-make usage-based, on-demand and object-specific insurance products that are specifically targeted to individual lifestyles and activities.” What this really means is that if the information the insurer collects on you shows that you are a low-risk client, they can offer you a reduced premium as an incentive to sign up with them. As the use of big data becomes more widespread, we can expect insurance companies to start directly targeting low-risk individuals by offering better premium rates to entice them to make the switch.

“Insurers face a balancing act where they can use data to differentiate but they have to be cognizant of the principle of pooling risk,” says Philippides who argues that while an insurer cannot decline an application or load a premium using big data, they can, by law, use the information to decline a claim if fraud is suspected.

She uses an example of a South African short-term insurer who declined a claim for a car accident of a client when a social media post by her teenage son showed a picture of her BMW smashed into a tree with the caption “crashed mom’s BMW after a night on the town, but don’t worry it’s insured”. Unfortunately for him and his mom, she had lied about who the driver was that night and how the crash happened, and the claim was rejected. In a case in the US, a woman’s claim for a lost wedding ring was declined when a photograph of her wearing the ring was posted on Facebook subsequent to the claim.

Private vs public information

Where then is the line between private and public information? Did the insurers have the right to use information on people’s personal social media accounts to refute a claim?

Philippides believes the law is on the side of insurers as the Constitution states that “every person has the right to access information held by another when that information is required for the exercise or the protection of rights.” Philippides argues that the insurer has a right to protect against fraud and that fraud has implications for the larger community.

She adds that under the Protection of Personal Information Act (POPI), information can be used if you have consented to its use. “In most insurance policies the client agrees that when they submit a claim they will provide all proof and information relating to the claim, so consent is implied,” says Philippides, although she emphasizes that the insurer still needs to follow due process when dealing with a claim. The insurer must obtain consent to investigate a claim fully and analyse factual and medical information first. The use of information in the public domain is to be used to substantiate the information provided and the insurer is obliged to ensure clarity, authenticity and accuracy of the information.

While companies have a duty to use information responsibly, the reality is that the day you buy a smartphone or sign up for a loyalty programme, you hand over a great deal of your rights to privacy.

This article first appeared in City Press.

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