Alarmed by Admiral’s data grab? Wait until insurers can see the contents of your fridge


The company is to use Facebook data to calculate customer premiums. But even more invasive ways to monetise lives are coming with the Internet of Things

Anybody who has been overcharged by an insurance company, denied a claim or given the runaround by an insurers customer disservice should shudder at the idea of insurers learning how to deploy the internet as a way of monitoring customers and using their online data to determine how much they should pay.

The latest, inevitable news is that Admiral, one of the UKs biggest insurers, is to use customers Facebook data to help calculate how much car insurance they should pay.

Insurers are always looking for new ways to strengthen their position and sell their services. And while social media might seem to indicate personality traits associated with safe driving, a new seam of far more personal and invasive monitoring is opening up in the Internet of Things (IoT) thousands of internet-connected devices that monitor our lives at home, work and in transit.

Consulting firm AT Kearney says the IoT will disrupt traditional insurance models, while opening new frontiers for growth a common enough mantra for businesses exploiting new technologies. The problem comes when this disruption means new methods for squeezing more out of its customers and shirking obligations to pay us. Take, for instance, the unfair (even illegal) practice of price optimisation, which means analysing non-risk-related data, such as shopping habits, to target people with personalised prices that reflect how much they will pay, not their risky behaviours.

Many analysts predict that insurance could be the major business model underpinning the IoT, similar to how advertising bankrolls many web platforms. Corporations clearly smell the money; Dell computers consulting arm opened an insurance accelerator in 2015, and Microsoft has also partnered with American Family Insurance to start a similar incubator program.

Insurers are already designing and deploying internet-connected devices. Progressive Insurances Snapshot plugs into your car to track how and when you drive, while other insurers are partnering with IoT firm Nest which makes smart thermostats and smoke alarms and fitness tracker Fitbit to offer discounts for allowing data reports about your behaviour.

If insurance does become the financial underbelly of the Internet of Things, what does that mean for how these technologies are developed, how they affect our lives and how they spread throughout society?

The tradeoff of control for convenience dataveillance for discounts may seem innocuous now. But when insurers exert influence over the IoT, they will have access to powerful monitoring abilities. By design, smart devices record and report information about our behaviours, lifestyles and preferences. Each device is like a window into a different part of your life, and insurers want to be the ones pressing their face against the glass.

Nothing will escape their notice. Every sugary drink or fatty food you indulge in will affect your premium. Every hour you go without replacing the batteries in that chirping Nest Protect alarm means added points to your risk score. Hard braking, or driving at odd hours. Insurers will already send you a tracking device for free so that they can tap all the valuable data you produce.

With devices such as smart thermostats and lighting, the IoT offers real potential for improving our lives. But that all depends on who the technology is built for. Photograph: Samuel Gibbs for the Guardian

Second, the IoT can help insurers manipulate our behaviour, through policy conditions and incentives. Discounts can quickly become penalties once expectations about data disclosure shift from novel to normal. As surveillance by insurers becomes more accepted, argues law professor Scott Peppet, it will give rise to its own stigma: when disclosure becomes low-cost and routine, those who hold out are suspect. Impeding the flow of data and grasping for privacy may carry with it the presumption that one is hiding information.

So unless you can afford the financial and social cost of suspicion, you are left with no real choice but to comply with insurers demands for data.

The IoT will also open up new avenues for monetising customers. Insurers claim that the IoT will allow them to charge more accurate prices, thus ensuring that people pay what they should. Their hypothetical examples are always about a client getting unexpected discounts, and that will be true for some people.

Yet there is little reason to believe that the industry overall wont use risk monitoring and personalised prices to increase their own revenues. If data analytics are used to smuggle in unfair discrimination and price optimisation, we have even less ability to understand and contest these practices.

By providing us with new and better ways of doing things, the IoT offers real potential for improving our lives. But that all depends on who the technology is built for. We would be remiss if we allow a new generation of internet-connected devices to be designed to benefit insurance companies. When industries eagerly embrace innovation, it isnt because they will be the ones disrupted.

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