FTC Do-Not-Track and Insurance Underwriting

I read recently where life insurance companies are testing data-based underwriting to replace the traditional nurse visits, EKGs, blood and urine tests in order to cut the per policy underwriting cost from around $1,000.00 per policy to around $100.00 per policy. It sounds good to me. My brother and I recently completed a buy-sell agreement that is funded by life insurance. Life insurance companies say their biggest sales obstacle is the current underwriting process and as a recent consumer I would tend to agree. For the sake of convenience I would much rather have them access a database, along the lines of the CLUE database, and underwrite and bind the policy by phone. On the other hand, WHAT ABOUT MY PRIVACY? How do these guys know how often I go to the gym, eat Big Macs, or go sky diving?  The property and casualty side of the business has been using credit data for underwriting for about twenty years with pretty good results. It’s now been proven that higher credit scores equal lower claims. So it doesn’t take a rocket scientist to know that no exercise, frequent Big Macs, and lots of sedentary activity like watching television equal more life insurance claims.  When you think about it it makes a lot of sense and it sounds like a great idea…until someone abuses the access to the data, or cleverly devises another use that is at best discriminatory and at worst downright harmful.

And here lies the dilemma we see shaping up all around us concerning efficiency versus privacy. In this new electronic age of social networks and web sites that track our every move databases are being built faster than ever before. Which brings me to the Do-Not-Track report.  It basically gives the consumer a choice. Do I want to let you track my movements, or not? Read the actual proposed report for more detail. As someone who lived through the FTC’s Do-Not-Call implementation, I think this is a good thing. People should have a choice about what information is gathered about their behavior and habits. I consider myself a capitalist and I’m all about free markets, but it was disconcerting to read about the level of data available for the data-based underwriting solution Deloitte Consulting LLP is selling to life insurance industry. Considering most of the databases now being built are the result of the internet it was no coincidence to see the FTC ruling. What you guys think? By the way, if you want to use any of our services, just visit my web site , give me little information and we won’t track you unless you say it’s ok.