With all great technological developments, we have to accept the good and the bad.
This will undoubtedly be the case in the insurance industry. The article referenced below raises some interesting points about how the huge technological and data-gathering leaps being taken may lead to quite a nasty juncture.
We are probably going to get to a point where we know a bit too much about our customers. Growing up in Belfast, I know all too well how difficult it is to get car insurance - the most expensive place in the UK to get insured as a young male! How hard would that have been if my day-to-day routine, my diet, sleeping pattern etc. was analysed from the age of 16?
Many ethical questions will be raised over the coming years as data measurement becomes ever more intrusive. However, if firms communicate clearly with their stakeholders and lead by example, clearly drawing the line between what is ethical and what goes a bit too far, we should have nothing to fear!
By assessing individuals’ risk more and more accurately, insurers could cherry-pick the ‘good risk’ from the bad, leading to increasingly differentiated pricing or coverage denial for some individuals. Such personalized developments would undo the traditional principle of solidarity at the core of insurance, which is designed to spread the financial burden of illness or misfortune between the fit and fortunate and those who face unexpected hurdles or higher medical bills later in life. “If I calculate every individual’s personal premiums and personal risk, I’m no longer spreading risk out collectively,” VZBV insurance expert Lars Gatschke said. Insurance could instead become an arbiter of social norms, penalizing individuals for snacking on junk food or taking too few steps, for example, irrespective of their particular circumstances, Gatschke said.