By: Gokul Menon November, 22, 2019


It is prudent to exercise caution before posting pictures of oneself smoking or chugging down alcohol now that the  New York State Department of Financial Services has authorized the usage of “external consumer data and information” to set premium rates, by life insurance companies in New York.

The New York State Department of Financial Services (NYSDFS) recently permitted life insurance companies to use social media posts of consumers to determine insurance premium rates. New York has become the first state to impose guidelines on the validity of such data by life insurance companies. The department, in its circular letter, affirms that it completely supports innovation through technology in the realm of life insurance. It also states that external consumer data refers to “any data or information sources not directly related to the medical condition of the applicant that is used – in whole or in part – to supplement traditional medical underwriting, as a proxy for traditional medical underwriting, or to establish “lifestyle indicators” that may contribute to an underwriting assessment of an applicant for life insurance coverage”. The letter largely explores the benefits of such technological advances to both insurers and the insured. The circular letter also stresses the limits, this advancement can be used for. Insurance Law Article 26 does not permit the use of “race, color, creed, national origin, status as a victim of domestic violence, or past lawful travel in any manner, among other things, in underwriting.”

However, The Wall Street Journal’s research reveals that not many companies seem to be using social media data to decide on premium rates. The use of non-traditional data also helps insurers in unearthing fraud. It assists them in checking the authenticity of the information entered by the insured in their application forms. This is essential in deciding the premium rates, weighing in the risks involved. The use of algorithms and patterns to discern one’s life insurance score is not entirely new. Machine learning is being used by MassMutual (Massachusetts Mutual Life Insurance Company) along with LifeScore Labs (LifeScore A2B). They attempt to make the process more transparent by trying to explain the algorithms used to rate the life insurance scores of customers.


The problem with this kind of surveillance, though, seems to be twofold. Firstly, a change in the behavioral pattern among people. Two, it could lead to an imbalance in the rate of premiums. Though the Department of Financial Services makes the rules against discrimination clear, it would be necessary to have checks and tests in place for the algorithms. Regular reports of testing for biases would be necessary to keep this endeavor clean. While this could lead to protests from people about a breach of privacy, it is also essential to remember that this could mean a proper setting down of guidelines to regulate the process. Moreover, this regulation by the New York State Department of Financial Services comes at a time when this method is being employed extensively.

This is a move away from traditional methods of gathering data, such as questionnaires. The new method of surveillance, though, digs deeper into the private realm and raises a lot of ethical questions. It should also be noted that insurance companies have had access to trends in social media before this move. But, this latest move could mean direct interaction with one’s personal information. Although this initiative has its share of naysayers, customers’ awareness and a proper perusal of the insurance document alongside these guidelines would go a long way in settling fears of privacy intrusion.


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Gokul Menon

Gokul works as a writer at Gavop. He holds an M.A. in Comparative Literature from the University of Hyderabad and a Bachelor’s in English from Madras Christian College. He has been a part of a couple of theatre groups, like Masquerade Youth Theatre and Theatre No. 59 and enjoyed being a part of Literary and Debating circles in Chennai. Gokul is an avid reader and has presented a few academic papers. He spends more time on Goodreads, than on any other social media platform.