The Wall Street Journal reports on the increasing use by insurers of detailed, individualized data files on consumers. The personal data, such as online shopping details or social-networking information, has previously been used for targeted behavioral advertising. (I’ve often discussed privacy problems with targeted behavioral advertising, where a user’s online activity is tracked so that ads can be served based on the user’s behavior. Often, consumers do not understand they are being tracked or have a false belief in the security of their data.)
Life insurers are testing an intensely personal new use for the vast dossiers of data being amassed about Americans: predicting people’s longevity. Insurers have long used blood and urine tests to assess people’s health—a costly process. Today, however, data-gathering companies have such extensive files on most U.S. consumers—online shopping details, catalog purchases, magazine subscriptions, leisure activities and information from social-networking sites—that some insurers are exploring whether data can reveal nearly as much about a person as a lab analysis of their bodily fluids. […]
The research heralds a remarkable expansion of the use of consumer-marketing data, which is traditionally used for advertising purposes. This data increasingly is gathered online, often with consumers only vaguely aware that separate bits of information about them are being collected and collated in ways that can be surprisingly revealing. The growing trade in personal information is the subject of a Wall Street Journal investigation into online privacy. […]
For insurers and data-sellers alike, the new techniques could open up a regulatory can of worms. The information sold by marketing-database firms is lightly regulated. But using it in the life-insurance application process would “raise questions” about whether the data would be subject to the federal Fair Credit Reporting Act, says Rebecca Kuehn of the Federal Trade Commission’s division of privacy and identity protection. The law’s provisions kick in when “adverse action” is taken against a person, such as a decision to deny insurance or increase rates.
The law requires that people be notified of any adverse action and be allowed to dispute the accuracy or completeness of data, according to the FTC. […]
There are myriad sources of personal data. Acxiom recently told investors it takes in three billion pieces of information daily as businesses seek to “monetize” information about their customers. Some retailers share information about purchases made by people, including item description, price and the person’s name.
Increasingly, information comes from people’s online behavior. Acxiom says it buys data from online publishers about what kinds of articles a subscriber reads—financial or sports, for example—and can find out if somebody’s a gourmet-food lover from their online purchases. Online marketers often tap data sources like these to target ads at Web users.