Info-gathering Devices Produce Data Flood
The smart chips and the satellites to upload the collected data routinely installed in cars, appliances, radios, CD players, phones and other electronic devices since 2002, are producing information on usage patterns. While privacy advocates vow to fight court rulings allowing this information to be used, it appears inevitable that the magnitude of the information being created, the multiple means by which it is being collected, and the plethora of emerging commercial applications ultimately will lead to its acceptance.
Implications for p-c insurers:
New data are available for establishing exposures and classifications. Customer segmentation techniques continue to be refined, and increasingly used in both underwriting and pricing.
Classification schemes that recognize continuously varying exposure characteristics are being created.
New data quality challenges are emerging, including matching data elements from different sources (such as cell phones and cars) and selecting the most appropriate factors to use.
The lure of premium discounts has drawn many low risk consumers to agree to divulge the data collected by the smart chips to their insurers. Those consumers unwilling to provide such information are now increasingly classified with less desirable risks, paying higher premiums.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, July 30, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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