As we become more proficient and comfortable using the internet for daily activities—including shopping, social networking and entertainment—it is important to be mindful of unintended consequences.  Many of us are now familiar with the fact that employers may screen photographs that job candidates have posted on social networking sites.  A New York Times article stated that in 2009, 35 percent of employers withheld job offers after uncovering questionable content.  As a result, most users now put more privacy settings in place to eliminate the likelihood of photos and other personal information being used in this manner.

I recently read an article, “Insurers Test Data Profiles to Identify Risky Clients” in The Wall Street Journal.  If you did not see this article, you may be surprised to learn that life insurance companies are starting to test the use of personal information collected from various online sources to predict longevity.  Insurers have typically used blood and urine tests, as well as, doctors’ records to assess the health of life insurance applicants.  The costs of this process range from approximately $250 to $1,000 per applicant.  One of the motivating factors for testing the predictive capabilities of personal information is the cost per applicant, which could decline by $125, a significant reduction.

Data collection firms currently gather and collate information that is used by marketing research firms, often with minimal oversight by any regulatory agencies.  Increasingly, this data is gathered both on- and off-line, then sorted to help categorize an individual’s behavior by activities, food choices, career and family choices, etc., that could be used to determine an individual’s risk profile for insurance purposes.  Acxiom Corp, one of the biggest data firms, buys data from online publishers that provide information on the types of articles subscribers read.  The current testing model assumes that many diseases relate to lifestyle factors, such as exercise habits and fast-food diets.  In theory, those subscribing to Tennis Magazine and Runners World would likely be looked at more favorably as applicants for life insurance than those who are identified as regularly purchasing fast-food.

It should be noted that the use of online data by insurance companies for the purpose of discovering personal characteristics that may then be used to predict the risk profiles of life insurance applicants is still in preliminary test phases.  Insurance regulators will eventually determine whether the use of online data is an appropriate measure of risk.  It is important to be aware of the fact that insurers assert that they would not use the information to deny life insurance to anyone.  In addition, there are questions as to whether this data would be subject to the Federal Trade Commission’s Fair Credit Reporting Act, due to privacy and identity protection issues.

Certainly, this is a very brief overview of the issue.  My goal was simply to bring this information to your attention as you make decisions regarding internet usage today that may impact your future.


Ann Rackers, MBA

Ann is the professional consultant for Steve Finerty and Linda Pietroburgo.