IMS Blog

Is Rating Driver Risk by Using Social Media the Right Approach for Insurance Companies?

Insurers around the globe are continuously looking for the most accurate ways to assess risks and better evaluate drivers’ behavior, outside of the traditional methods of calculation, which are heavily based on age, gender and location. Today, many insurance companies are looking to social media, including Facebook, to evaluate a client’s risk to the insurer.

Insurance companies can soon be requesting permission to access drivers’ social media account so that the information can be used to create personality-based profiles for their drivers. The idea is that there are patterns and correlations between how people interact with social media, and how they behave in their real lives. The information being sought is evidence that a driver is conscientious and, thus, less likely to get into an accident. This evidence would include analyzing writing styles as well as what a person’s interests are by looking at likes and shares.

Many drivers may find this way of assessing risk to be an invasion of privacy, arguing that what they do online in terms of social media interaction is in no way indicative of how they handle themselves on the road.

A less intrusive and more accurate option for evaluating risk is the implementation of a connected car insurance or usage-based insurance (UBI) program. An insurance company with a UBI program is able to analyze actual driver behavior, such as braking, acceleration, distance traveled, speed and time of day driven.  There are no assumptions made, as the program collects the driving information in real time.

A UBI program allows for better alignment of insurance calculations based on individual risk factors, resulting in enhanced customer segmentation versus assumptions made by looking at social media accounts. Over and above the accurate analysis of a UBI program there are also social benefits recognized through the consumer awareness of unsafe driving behaviors, measured through real-time feedback. In addition, young drivers can obtain affordable insurance due to rates that reflect their individual driving.

Evaluations made by looking at someone’s Facebook account are akin to traditional calculations that weigh heavily on assumptions based on driver age, gender and vehicle make. These traditional and non-traditional metrics are largely based on best guesses and are not necessarily reflective of an individual behind the wheel.

White Paper – Industry Benefits of Insurance Telematics and InsurTech

White Paper – Industry Benefits of Insurance Telematics and InsurTech