With the costs for qualifying blood tests soaring past $100, life insurers are starting to look to consumer data to evaluate potential life insurance customer risk.
Instead of having potential customers take a blood test, get their blood pressure measured and get weighed by someone making a home visit, which can add significantly to underwriting costs that reach $250 to $1000, insurers are looking to use the resources of marketing database companies, according to the Wall Street Journal.
There are a number of database companies that have detailed information on more than a hundred million households-- Acxiom, Alliance Data Systems Corp, Experian PLC and Infogroup. The WSJ reports that Acxiom told investors it collects three billion pieces of consumer information daily. Businesses provide this info as a means of monetizing their customer information.
When you use a supermarket or pharmacy loyalty card you're contributing to those databases.
Now, the insurers are weighing factors about your lifestyle habits to decide if you should be eligible for insurance, how much you should pay and whether they should reach out to and advertise to you for insurance.
There are some laws that regulate these considerations, so the information is used in a continuum of ways, mostly, so far on the marketing end. But that could change in this corporate friendly legal climate.
Some of the factors that are considered:
- You make healthy or unhealthy food choices -- high fat and calorie items in your grocery bill, fast food purchases, versus produce could cost you access or price for insurance.
- Signs that you are more active -- buying running shoes, health club or gulf club membership, bicycle supplies.
- Signs that you watch too much TV -- subscribing to lots of premium TV channels.
- A commute to work over 45 miles.
- Use of tobacco
- Indicators you are actively involved in your community.
- Credit problems vs healthy financial status.
- Driving record with more than one moving violation in the past five years.
Some of these database companies are tracking or buying data on the kinds of articles that people read. Someone who reads about running or how to play a better golf game might be more attractive than someone who reads about how to make a tastier gourmet fondue or fancy dessert.
The idea of tracking lifestyle patterns is not new.
You've probably seen this video by late film director Aaron Russo, showing where access to databases can go.
This development in the use of databases by life insurers makes the video all the more prescient. Next time I go to the supermarket, I'll be asking to use the store's card... unless I'm buying just veggies and workout gear.