Your insurance company knows more about you than Facebook | CBS News

With billions of dollars on the line, insurers maintain a huge database of those they regard — correctly or erroneously — as bad risks. ISO, a subsidiary of Verisk Analytics, uses detailed reports from insurers to perform this type of “predictive analytics.”

Insurers can also obtain crucial data on car accidents and violations on an almost real-time basis. One company, Nexar, said it can “automatically create a comprehensive collision report within minutes of an incident — including footage of the crash and notify [insurance] providers.”

“Insurers look for everything they can find on an individual or company, including Yelp reviews,” said risk consultant Evan Taylor of NFP Corporate Services, an insurance consultancy.

While these new tech tools can be beneficial, insurers have also been caught using “price optimization,” now outlawed in 16 states. Insurers mined customer data and tested incremental price increases to figure out which policyholders would switch to another carrier. The AI told insurers who would accept higher premiums, so they could charge them more.

Amy Bach, executive director of United Policyholders, which represents consumers, said insurers’ knowledge of their customers’ financial status can aid the insurer if and when a claim is filed. “Insurers can determine how to lowball a claim settlement offer and get away with it, where the breaking point is and when the consumer will push back and retain a lawyer,” said Bach. “AI finds the sweet spots in both sales and claims.”

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Your insurance company knows more about you than Facebook – CBS News.