Millennials, Their Digital Data, and You

The regulation document primarily stresses on "unlawful discrimination" using Big-Data algorithms to sift through social media data sets, followed by the issue of "consumer disclosure" of criteria used for premium discrimination and the overall "transparency" of the process. Only cases where the insurer can present a "valid explanation or rationale" will result in the option to use social media data, increasing compliance burden for carriers.

With the enforcement of the policy, algorithms will take on a different color. The insurtech market will be directly impacted with certain benchmarking and bias-proofing mechanisms emerging as mandatory elements of algorithms used by the insurers and vendors.

The concept of the algorithmic impact assessment will have a role to play here, making insurance offerings and claims settlement more efficient. The market will also have little choice but to adapt and be resilient to what is being called the "goals to guidelines" model in AI-based research.

Besides looking at algorithmic bias, the insurance and insurtech industry will need to evaluate data privacy from a whole new perspective. The EU and certain technology-savvy states like California are already enacting laws that will grant consumers and social media users more control over how and why their data is being used. One example is the California Consumer Privacy Act of 2018. The other development in response to data privacy concerns is the use of "opt-in" collection of social media data to target and guide healthy behavior among the general population and Millennials.

In the digital era, consumers — especially Millennials — are tracking everything from the food they eat to the number of steps they take everyday. Our research shows that millennials might be more willing to buy insurance if their real-time health data could reduce premiums.

In the very end, this policy is the start of a much larger conversation around what constitutes public data and how it might be used. Insurers should seek to use this policy to extend the e­fficacy of their products and should consider trying to influence consumer behavior in return for valuable services and unbeatable customer experience.

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Ashish Jha is the chief marketing and communications officer at SE2, a technology services firm and third-party administrator that services companies in the life insurance and annuity sectors.