How car insurance companies may use social media against you to hike costs

Posted at 10:15 PM, Nov 23, 2015
and last updated 2015-11-24 11:20:08-05

SALT LAKE CITY -- The majority of Utah’s insurers all hiked up their rates this past year, saying there was more risk on state roadways.

But consumer advocates say the risk isn’t in the motorist’s driving – it’s in their lifestyle and part of a new pricing tactic insurers are using.

Insurance companies typically look at things like accidents or tickets a motorist received to calculate their pricing.

But now there’s concern the companies are expanding their analysis, reviewing things like a driver’s shopping habits or social media profile. It’s a type of data mining critics say is illegal.

Driving Utahns told FOX 13 News’ Caroline Connolly that they saw increases in their insurance.

FOX 13 News took a look at Utah’s five biggest insurers: State Farm, Farmers, Allstate, Bear River and Progressive. Four of the companies had rate hikes between 3 and 6 percent in 2014 and 2015.

The reasons they give vary from increased accidents to a more competitive marketplace here. But those standard explanations may be accompanied by lesser known motives.

“What they’re trying to figure out is can we push your individual price a little bit more and you’ll still stick around with us,” said Douglas Heller with the Consumer Federation of America.

The Consumer Federation of America is a watchdog group that’s been raising awareness about price optimization insurance.

Price optimization insurance is when the risk associated with drivers becomes less about what they’re doing on the road and more about their life off the road, like their shopping habits and social media profile.

Other elements that shape a person’s public profile and can ultimately be sold to companies looking for data on their consumers.

It’s a tactic Heller’s group discovered insurers started using a few years ago.

“They were measuring things like what people were buying at the supermarket, including how many bananas and how many apples they would purchase.  They also were looking at things like race and income,” Heller said.

The concern prompted state insurance commissioners from around the country to investigate the issue, drafting this analysis of “data mining of insurance” to come up with possible guidelines.

Currently, there is no evidence of the practice currently in Utah, said Utah’s Deputy Insurance Commissioner Brett Barrett.

“Our alert has been raised, we are more conscious of it,” Barrett said.

But the problem is already nationwide, according to Heller’s group, which has already pointed the finger at companies like Allstate Insurance.

Allstate officials sent an email to FOX 13 in response, which says in part:

“We use information such as driving safety record, amount and location of driving, type of vehicle and individual behaviors to provide our customers with accurate and competitive rates.”

When FOX 13 News asked them to elaborate on 'individual behaviors' they referred us to their statement.

“If you can’t explain what you’re doing then you shouldn’t be doing it,” Heller said.

For Heller and motorists, an explanation is always warranted, especially when it comes with a cost on the roads.

Just last week, the National Association of Insurance Commissioners, which was looking into this issue, voted to adopt what's called a white paper, essentially a list of guidelines.

According to Heller's group 14 states, not including Utah, have put out their own guidelines, strictly prohibiting this kind of social mining by insurers.

Heller's group is hoping this stance by commissioners leads to future laws at the federal level ensuring it doesn't happen.