6 Feb 2018

How Will New Definitions Of Privacy Impact Insurance?

Late last year the United States Supreme Court heard oral arguments in Carpenter vs. The United States, a case that many believe will be a landmark for defining the right to privacy in the digital era. The court is being asked to decide whether or not the government can use personal data – in this particular case geolocalization data from a cell phone – to track an individual’s movements for a long period of time and without a warrant issued on the basis of probable cause.

In this era where data rules all, privacy is no longer about assuming that no one is paying attention to what you do. It’s about assuming that everyone is paying attention to what you do. And while the Supreme Court and institutions in other countries grapple with the law of it all, the fact is that this change in what privacy means is affecting all of our personal and business interactions.

For insurance companies, especially health insurance companies, the implications are significant. Our relationships with policyholders, strategic partners, employees and regulatory bodies will all be affected. That reality can be challenging but it can also be an opportunity for innovation.

The Consumer Conundrum

While we’re nowhere near underwriting a life insurance policy via Snapchat, there’s no denying the accelerated impact that Millennials, and Generation Z after them, will have on our business given their reliance on digital technology - apps, connected devices, AI and more. And the more digital technology becomes a part of our business model, the more questions arise about how data is obtained, protected and used.

The security element is especially critical. People may be willing to give up privacy in the traditional sense of the word but they want guarantees about the security of their data in return. So the challenge for us as insurance providers is to find a workable balance between the conveniences that digital technology offers and the priority that needs to be placed on data protection.

I expect that large insurance providers will drive a lot of the innovation in this area. That’s normal given the resources that are available to them. The important thing for mid-size or smaller insurance carriers will be the early adoption of new systems or tools so that the whole industry can evolve forward and adapt to this shifting landscape.

Opportunities To Optimize

This evolution in how we disclose our personal information doesn’t just come with constraints for the third parties that we disclose it to. It also comes with incredible opportunities to optimize the products or services that we receive.

Insurance companies can add value through these opportunities, especially on the health side. Through health risk assessments, employer sponsored wellness programs and more proactive primary care providers, we can create touchpoints for our clients (also for our employees) that allow us to work more effectively with them on managing their health.

Our strategic relationships with health care providers can also benefit in this way, improving our ability to provide insureds with the best treatment options available to them. Ultimately, it’s about using the personal information that people entrust to us for their benefit.

The speed of all these changes is astonishing and can be disruptive to existing practices, . but innovation and adaptation are  critical going forward. As an industry, we should relish the challenges and embrace the opportunities.

Scott Reitan is Senior Vice President - Information Technology & Administration at Pan-American Life. He is based in New Orleans, Louisiana.