Insurance coverage

How Your Online Behavior Can Affect Your Insurance Coverage

What if your insurer tracked your data online to rate your car insurance? Sounds far-fetched, right?

Yet the digital traces we leave online have predictive value. And insurers can use data collection and analysis tools to find our data and use it to price insurance services.

For instance, some studies have found a correlation between whether an individual uses an Apple or Android phone and their likelihood of exhibiting certain personality traits.

In one example, American insurance broker Jerry analyzed the driving behavior of some 20,000 people to conclude that Android users are safer drivers than iPhone users. What prevents insurers from referring to such reports to establish the price of their insurance?

our latest to research shows that Australian consumers have no real control over how data about them, and published by them, might be collected and used by insurers.

Looking at several examples of customer loyalty and social media programs, we found that insurers can access large amounts of consumer data under the Australian regime. weak privacy laws.

Your data is already there

Insurers are already using big data to price consumer insurance through personalized pricing, according to evidence gathered by industry regulators in the UK, European Union and United States.

Consumers often “accept” all kinds of data collection and privacy policies, such as those used in loyalty programs (who doesn’t like freebies?) and by social media companies. But they have no control over how their data is used once it is transmitted.

There are far-reaching inferences that can be drawn from data collected through loyalty programs and social media platforms – and these can be uncomfortable, even highly sensitive.

Researchers using data analytics and machine learning have claimed to create models that can guess a person’s sexual orientation from images of their faceor their suicidal tendencies Twitter posts.

Think about all the details revealed from a single grocery story: diet, household size, addictions, health status, and social background, among others. In the case of social media, a user’s posts, images, likes, and links to various groups can be used to paint an accurate portrait of that individual.

Additionally, Australia has a Consumer data rights which already obliges banks to share consumer banking data (at the consumer’s request) with another bank or another application, for example to access a new service or a new offer.

The scheme is being actively extended to other parts of the economy, including the energy sector, with the idea that competitors could use energy consumption information to make competitive bids.

The right to consumer data is announced as empowering for consumers – enabling access to new services and offers, and giving people choice, convenience and control over their data.

In practice, however, this means that insurance companies approved under the program may ask you to share your bank details in exchange for insurance services.

The previous coalition government also open finance proposal, which would extend the consumer data right to include access to your insurance and pension data. This has not yet happened, but it is likely that the new Albanian government will look into the matter.

Why more data in the hands of insurers can be bad news

There are many reasons to be concerned that insurers are collecting and using increasingly detailed data about people for insurance pricing and claims management.

On the one hand, large-scale data collection provides incentives for cyberattacks. Even if the data is kept in an anonymous form, it can be re-identified with the right tools.

In addition, insurers may be able to infer (or at least think they can infer) facts about a person that they wish to keep confidential, such as their sexual orientation, pregnancy religious status or beliefs.

There is ample evidence that the results of artificial intelligence tools used in big data analysis can be inaccurate and discriminatory. Insurers’ decisions may then be based on misleading or false data. And these tools are so complex that it is often difficult to determine if, or where, errors or biases are present.

Although insurers are supposed to pool risk and compensate the unlucky, some could use the data to offer affordable insurance only to very low-risk people. Vulnerable consumers may face exclusion.

A more generalized use of data, in particular via the right to consumer data, will particularly disadvantage those who cannot or do not want to share data with insurers. These people may be low risk, but if they can’t or won’t prove it, they will have to pay more than a fair price for their insurance coverage.

They may even pay more than they would in a pre-Consumer Data Right world. So insurance can move further away from a fair price when more personal data is available to insurance companies.

We need immediate action

Our Previous search demonstrated that outside of anti-discrimination laws, constraints on how insurers are allowed to use consumer data, such as that extracted from online sources, are inadequate.

The more insurers base their ratings on data that a consumer has not provided directly, the more difficult it will be for that person to understand how their “risk” is rated. If an insurer asks for your transaction history for the past five years, would you know what they are looking for? These problems will be exacerbated by the expansion of consumer data law.

Interestingly, the insurance companies themselves could do not know how the collected data translates into a risk for a specific consumer. If their approach is simply to feed data into a complex and opaque artificial intelligence system, all they will know is that they are getting a supposedly “better” risk assessment with more data.

Recent reports retailers collecting customer data for facial recognition have highlighted how important it is for the Albanian government to urgently reform our privacy lawsand look closely at other data laws, including proposals to extend the right to consumer data.


Zofia Bednarzlecturer in commercial law, University of Sydney; Kayleen ManwaringSenior Fellow, UNSW Allens Hub for Technology, Law & Innovation and Senior Lecturer, School of Private and Commercial Law, UNSW Law & Justice, UNSW Sydneyand Kimberlee Weatheralllaw professor, University of Sydney

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