When you apply for life insurance, you fill out a lot of forms with your personal information. It’s expected, after all – you are asking a company to basically take a bet on your good health and life expectancy. Insurance companies want to know if you are a good risk.
Count on at least one of the forms you sign to authorize the insurance company to gather data on you. Back in the day maybe that didn’t mean so much, but today? More detailed information can be gathered faster than ever before. Life insurance companies may seek out information on:
- Any prescription medications you take
- Your driving records, including speeding tickets and DUIs
- Your credit history, including foreclosure and/or bankruptcy records
All the above, and more, can come to light and affect your life insurance rates – or whether you get insurance at all.
Big Data and Life Insurance
Big data companies happily supply information upon request to life insurance providers at the speed of digital data. The health, driving, financial and other personal details help insurers build the big picture and evaluate your risk as a potential client. Robert Kerzner, President and CEO of worldwide financial services and insurance information company LIMRA compares this to putting together a puzzle that determines whether you get the policy, are denied, or are charged a higher rate.
That health information? Companies such as ExamOne (affiliated with Quest Diagnostics) and Milliman IntelliScript deliver prescription and doctor-ordered lab test information directly to insurance companies. Milliman says it can deliver a report within seconds. So… the corporation that administers your diagnostic testing may also be selling the results to life insurance companies… If it’s any consolation, the records of your prescriptions being traded likely don’t date back more than 10 years; it’s only in the past decade or so that information has been captured electronically on a widespread basis.
Your driving records? A DUI or any kind of reckless driving conviction can make it difficult to qualify for life insurance.
And they happen to appear public records that can be accessed by digging through a couple of Google searches. You can be pretty sure that an accumulation of speeding tickets will make it harder to get insurance at the best price. Companies such as LexisNexis Risk Solutions seek out and compile that information, providing insurers motor vehicle reports from any state in the nation.
Information on your financial health? LexisNexis—whose main business is as a provider of legal, government, business, and high-tech information—also scans for records of financial events like recent and/or undischarged bankruptcy. Reports can be gathered and sent through online requests, as opposed to the mailing and faxing of the past. This is just another (quickly gathered) piece of information that may be added to the “no” or “raise the rate” side of the applicant’s risk scale.
Insurers Share Data with Other Insurers
The MIB Group Inc. is a member-owned not-for-profit organization – and the “members” that own it are insurance agencies. The group says its actions may help lower the cost of life and health insurance for consumers by detecting fraudulent, missing, or mistaken information on applications. Every time a member company gathers information on you, it reports the data to MIB to add to their online database. The next time you apply for insurance, that potential provider can access the database, add any information they’ve collected from you, and see if any ‘red flags’ come back when information doesn’t match or is missing. Any MIB member insurance company can access in information, pretty much instantly. So, if your high blood pressure has been noted by one agency, any other member provider knows it’s a little high as well.
Almost all life insurers use data collected by MIB, and about six in 10 use prescription databases, lab results and motor vehicle records to help decide whether to issue policies, according to LIMRA, a financial service research group.
You Told Them They Could
And all of this is completely legal. If you signed a life insurance application that asked for your consent to collect personal information, these practices are consistent with privacy laws such as the HIPAA (Health Insurance Portability and Accountability Act) as well as the Fair Credit Reporting Act.
From the ExamOne website:
ExamOne requires prior written consent from insurance applicants, which appears in the HIPAA compliant authorization that is part of the insurance application. The authorization must be signed and dated prior to accessing the information.
It’s ALL About Speed
Life insurance companies are using big data as a means to streamline the process of selling insurance. A medical exam, blood test, and physician statement used to take more than 30 days to accumulate. Requesting driving records from multiple states, or credit records by fax or snail mail could take even longer. “In today’s world,” said LIMRA’s President & CEO Robert A. Kerzner, “that doesn’t cut it.”
The world’s largest insurance companies have found that speedy access to data greatly improves their business model: gathering all that information and gathering it quickly reduces risk, and makes the gamble the company is considering taking on you a little more sure. What about your business?
Are you meeting your need for (data) speed? Are you lowering risk and making business decisions with better odds because you have all your information at your digital fingertips? Do your workforce and your business processes have access to the information where, when, when, and as quickly as they need it?
More Speed, More Data, Less Risk
5i Solutions tailor-designs solutions that give your enterprise quick access to the data you need. We provide document management systems that allow you to access any document—or any piece of a document—instantly. Make your data available from any location with the 5i Cloud Vault. Gather information, create searchable and aggregated databases to assess risk and lower uncertainty – and do it all at the speed of digital data.