CoverHound's Social Data Makes ObamaCare Work for Vehicles
This guest post was written by Mary G. Liu. Mary grew up in San Francisco and is currently consulting several technology startups on sales and marketing in Silicon Valley. She recently tried to launch an online marketplace for gym classes while pursuing her MBA from University of Chicago Booth. She has extensive business acumen from fast-tracking a career in business technology consulting and investment banking in Manhattan and San Francisco. You can find her on Twitter @MaryGLiu
How auto insurance providers use your digital footprint as “lie detectors”
Like ObamaCare’s Health Insurance Exchange (HIX), a one-stop shop for consumers to comparison shop their insurance plans, CoverHound is an exchange that allows comparison shopping for auto, home, renters, and motorcycle insurances.
These exchanges are great at expanding coverage to more people at more competitive pricing: a no-brainer sell to consumers. Yet, they are a tough sell to insurance providers.
Although stiff competition may reduce insurance providers’ revenue, this is not a main concern for providers since price comparison is inevitable. Instead, a bigger concern is whether they can source quality customers from these exchanges. The limited information on the unique users of the exchange may lead to adverse selection. Providers are at risk of underestimating high-risk consumers especially when they lie about their driving or lifestyle activities.
Unlike President Obama, Founder and CEO of CoverHound, Basil Enan, cannot legally enforce providers’ participation. So how do insurance carriers get comfortable with limited information on consumers via these exchanges? Is there a “truth serum” to reveal true risk-factors for insurance underwriters, such as drunk driving habits, unreported drivers who are not covered, or off-record accidents?
Social media in commerce today is today's new “lie detector”! Your digital footprint — Facebook “likes” and tweets — can increase your insurance premium or reduce your deductible. Enan shares three basic metrics that can be derived from your social profile for insurance underwriting:
1. Undisclosed drivers:
To avoid insurance surcharges, consumers often misreport the number of drivers who should be covered under the same policy.
Lie detector: Ever wonder why Facebook instantaneously asks for “relationship status” updates after you upload that romantic-looking photo?Continued on the next page