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Insurance Reports

Insurance Companies Using Big Data to Decide on Consumers? Only 15% Are OK With This

Whether it be Facebook determining what ads pop up on your news feed or Amazon analyzing how to get a package to your doorstep in the quickest way possible, data dominates decision-making in 2018.

Big data has streamlined what were once open-ended questions into black and white processes by replacing subjective emotions with objective numbers and best guesses with predictive analysis. 

​The most widely-cited argument against big data pertains to one of our most coveted possessions: privacy. There is an inverse correlation between maintaining people’s privacy and using data to optimize their experiences, whatever they may be. 

​This is true with Facebook as we saw its founder, Mark Zuckerberg, appear on Capitol Hill to testify before Congress regarding how his company harvested detailed user-data and then shared this data with numerous third parties seeking an edge on the competition by tailoring ads to specific consumers.

The insurance industry, often seen as bogged down in outdated practices, is the latest sector to take the deep dive into data to decide on people. ProPublica recently published an eye-opening story regarding how health insurance companies have been collecting personal data-points pertaining to things like race, what you buy, and how much TV you watch to predict your health cost to them. 

Following on the heels of that story, LendEDU conducted a survey of 1,000 adult Americans to gauge how they felt about the intermingling of advanced data and the insurance business.

We came away with the following key findings

  • 15% of respondents believed that insurance companies should beallowed to use big data to determine risk in a potential insurance policy. 72% stated that this should not be allowed.
  • 55% of respondents believe insurance companies accessing private data is equally as threatening as tech companies doing the same.
  • 18% of respondents would be OK with insurance companies having access to their DNA if it meant they could qualify for a cheaper insurance policy.

Full Survey Results

(The following questions were administered through an online poll to 1,000 adult Americans)

1. Would you allow insurance companies to access your everyday health information if it meant that you could possibly get a cheaper policy?

a. 49 percent of respondents answered “yes”

b. 32 percent of respondents answered “no”

c. 19 percent of respondents answered “not sure”

2. Should insurance companies be allowed to use big data (including personal data, internet browsing history, social media usage) to determine your risk in an insurance policy?

a. 15 percent of respondents answered “yes”

b. 72 percent of respondents answered “no”

c. 13 percent of respondents answered “not sure”

3. Over the past few years, an increasing number of startups have begun offering insurance products. Would you trust a startup company to provide insurance products to you?

a. 19 percent of respondents answered “Yes, I would trust a startup company.”

b. 46 percent of respondents answered “No, I would not trust a startup company.”

c. 35 percent of respondents answered “not sure”​

4. What is a bigger threat to your personal privacy: Tech companies accessing your private data to run targeted ads (i.e. Facebook) or insurance companies accessing your private data to assess your risk to them?

a. 20 percent of respondents answered “Tech companies accessing my private data.”

b. 10 percent of respondents answered “Insurance companies accessing my private data.”

c. 55 percent of respondents answered “Both are equally threatening.” 

d. 8 percent of respondents answered “I am not threatened by either.”

e. 7 percent of respondents answered “not sure”

5. Would you be OK with an insurance company installing a camera in your home if it meant that you may be able to qualify for a lower cost policy?

a. 8 percent of respondents answered “yes”

b. 87 percent of respondents answered “no”

c. 5 percent of respondents answered “not sure”

6. Would you be OK with an insurance company installing a biometric tracker in your body if it meant that you may be able to qualify for a lower cost insurance policy? (ex. health, life)

a. 11 percent of respondents answered “yes”

b. 82 percent of respondents answered “no”

c. 7 percent of respondents answered “not sure”

7. Would you be OK with an insurance company having access to your DNA if it meant that you may be able to qualify for a lower cost insurance policy? (ex. health, life)

a. 18 percent of respondents answered “yes”

b. 71 percent of respondents answered “no”

c. 11 percent of respondents answered “not sure”

8. Do you believe your specific social and economic situations play an important role in your overall health?

a. 69 percent of respondents answered “Yes, they do.”

b. 20 percent of respondents answered “No, there is no correlation.”

c. 11 percent of respondents answered “not sure”

Observations & Analysis

Despite Knowing It Impacts Their Health, Consumers Don’t Want Insurance Companies Collecting Data on Them

We asked our survey participants if they believed that insurance companies should be permitted to use big data, such as what TV channels they watch or what social media pages they like, to determine their risk to the insurance company.

As discussed in the introduction, the report by ProPublica revealed that insurance companies have teamed up with data brokers to predict a consumer’s health costs by looking at obscure statistics like how much TV that person watches or if they buy plus-size clothing. 

So, how did the respondents feel about these practices…

Although not too surprising, a whopping majority of consumers, 72 percent to be exact, were against the premise of insurance organizations using personal data-points to assess risk when making the decision on whether to insure someone or not. Only 15 percent of survey participants thought insurance companies should be allowed to do this, while 19 percent have not yet made up their mind. 

It seems that people in the U.S. simply do not want to open another avenue that allows their personal information to become public knowledge, and its hard to blame them.

Data on past health or financial history is one thing, but the line for most consumers is crossed when what they do in the comfort of their own homes becomes part of the equation. To further defend this reasoning, we can point to the results of Q1 from our survey.

We asked if respondents would be OK with insurance companies unlocking everyday health information if it could lead to a cheaper policy; 49 percent of them stated “yes,” while only 32 percent said “no,” and 19 percent were “not sure.”

Previous blood work and health complications? Fine. What you liked on your Facebook newsfeed on March 22nd? Not going to fly. 

However, besides the fact that insurance companies are already harvesting such a personalized level of data, our survey revealed that most Americans can appreciate the fact that it is exactly this type of data that would provide a good read on their health. 

The following question was proposed to our online respondents: “Do you believe your specific social and economic situations play an important role in your overall health?”

James Heidebrecht, an insurance professional and owner of Policy Architects, perfectly summed up the future of the insurance industry: “Insurance companies are motivated by mitigating risk, making money and paying out fewer claims. Collecting and farming your data, no matter how seemingly insignificant whether it be from your finances, social media, online ordering, wearables, etc., will help them do this.”

He continued, “Anyone sharing personal data with a life or health insurance company does so at their own peril. However, the cats out of the bag and it already may be too late. Tech-dependent millennials live in a privacy-free world and an unbelievable amount of their data is available to be aggregated. The day is surely coming when it may be impossible to get insurance coverage of any sort without a company accessing your personal information.”

Most Americans See Insurance Companies & Facebook As Equally Threatening When It Comes to Data-Collection

When it comes to the topic of personal data being harvested by for-profit companies to gain a leg-up, it is safe to say that Facebook is the flag-bearer. Founder and CEO Mark Zuckerberg testified before Congress after it was found that his social media platform was collecting ultra-specific user data and then sharing that data with third party organizations looking to push their products on consumers. 

Facebook’s stock temporarily plummeted and the company had to deal with some public outcry, testaments to how much people treasure their personal data and also how they react when they feel as though they have been taken advantage of.  

In order to gauge how comfortable U.S. consumers are with insurance companies collecting personal data to make financial decisions, we pitted the insurance industry against the poster child for the data-privacy debate: Facebook. 

In a bit of a surprise, the majority of respondents, 55 percent, believed that insurance companies are just as threatening as technology companies, specifically Facebook, when it comes to having personal data accessed and used to the business’s advantage. 

20 percent of ​poll participants believed that tech companies posed the bigger threat to their privacy, while 10 percent thought that it was insurance companies that were the more worrisome threat. Interestingly, only 8 percent of consumers saw no threat from either industry, while 7 percent for undecided. 

It is quite eye-opening to see that so many Americans see insurance companies as an equal threat to their personal privacy when compared to tech companies like Facebook. This is because insurance companies can only do so much when they have one’s personal data; they can use the information to make a better informed decision on whether or not he or she is a good consumer to insure. 

Whereas tech companies like Facebook can constantly be gobbling up personal data because social media is something that people are using on an hourly basis. In other words, Facebook and other similar companies can consistently try to maximize profits because any Facebook peruser can become a paying customer with just one catchy, highly-targeted ad and a single click. ​

So this survey data can likely mean one of two things: people are not as concerned as we think when it comes to Facebook unlocking our personal data or consumers are seriously concerned about insurance companies doing the same. 

A Few Hypothetical Data-Harvesting Scenarios Involving Insurance Companies

To conclude this write-up, there were a few hypothetical situations that LendEDU proposed to our respondents regarding different ways insurance companies could collect our data and use that data to make business decisions. They may seem whacky at first, but they are not all too out of the realm of possibilities in the modern age where data is king. 

While we are pretty sure that none of the above scenarios are being practiced by insurance companies, all three nonetheless present an interesting topic of conversation. If insurance companies are using personal data to assess a potential policyholder’s risk, who is to say that they wouldn’t jump on the chance to monitor personal behavior via camera or evaluate our health through a biometric tracker or DNA. 

Although our respondents were really none too accepting of any of the hypothetical data-collecting practices, they were the most receptive towards the idea of allowing insurance companies to access their DNA to evaluate risk. 

18 percent of respondents indicated that they would be OK with an insurance company having access to their DNA if it led to a lower costing insurance policy. Interestingly, with the advent of ancestry tests, insurance companies actually have a right to request to see the results of a life insurance applicant’s ancestry test in order to analyze the DNA, just as they can request to see all medical records.  

OK, so maybe DNA testing is not too far off from becoming common practice amongst insurance companies. . .

In terms of the other two hypotheticals, just 11 percent of poll participants would be OK with having a biometric tracker installed in their body, while a mere 8 percent would be fine with a camera being installed in their home so insurance companies can monitor daily activity. 

Take these with a grain of salt, or perhaps something a bit bigger based on the way insurance companies are modernizing their practices and placing more and more trust in personal data-collection. 

An insurance agent of 10+ years that is licensed in 16 states, Matthew Barr explained that this growing, perhaps inevitable, data-driven decision making process will ultimately have to find a balance. “The question is how far is too far? At what point does data collection become too invasive? Is it fair if a life insurance company decides to decline you because you choose to have ice cream for breakfast every morning? What if your place of employment just happens to be in a dangerous neighborhood? Should you pay higher premiums based on crime rates by ZIP code of your employer?”

Barr concluded, “As with many other things in life, it’s best to find a balance. Insurance companies and consumers both benefit with tighter underwriting efforts but do we need to hire private investigators to monitor our every move?”​

Things to Consider When Shopping For Life Insurance

Life insurance can be an incredibly valuable product to own, but it’s also a major financial commitment.

LendEDU provides a few things to keep in mind before you seriously start shopping for life insurance.

Understand the Different Types of Life Insurance

First things first, there are a couple of different types of life insurance products so it’s important to know the differences between each to make the best possible decision for you and your loved ones.

The main two types of life insurance that you will likely decide between are whole life insurance and term life insurance. There are some significant differences between each so do your due diligence before making a final choice.

Decide if Life Insurance is Really Worth It

Life insurance is a major financial step to take so you must really think about if life insurance is worth it for you and your circumstances.

And, if you have already made a decision on what specific type of life insurance you want then you must think about if whole life insurance is worth it or if term life insurance is worth it depending on the product you opt for.

Figure Out How Much Life Insurance You Need

Finally, you need to figure out how much life insurance you need so that you get enough to cover your loved ones but not too much so that you end up breaking the bank and going into debt.

Things you need to consider when calculating how much life insurance you need include your outstanding debts, your annual salary, and your future financial obligations.


All results that are found within this report derive from an online poll commissioned by LendEDU and conducted online by online polling company Pollfish. In total, 1,000 Americans ages 18 and up were surveyed. The properly-aged respondents were found via Pollfish’s age filtering feature. Respondents were selected randomly from Pollfish’s online user panel of over 100 million. This survey was conducted over a two-day span, starting on August 2, 2017 and ending on August 3, 2018. Respondents were asked to answer all questions truthfully and to the best of their ability. 

See more of LendEDU’s Research