Why the Admiral-Facebook fiasco illustrates the pitfalls of big data

Big data acquired from social media can be beneficial for insurers as long as they understand the rules and regulations, according to Erik Abrahamsson, founder and head of operations at insurtech start-up Digital Fineprint, speaking in the aftermath of the scandal involving Admiral and Facebook.

The UK motor insurer has launched an app that uses an application process verified through Facebook. It had also planned to use algorithms to help determine the risk associated with that customer and potentially offer discounts based on this information.

But Facebook has now blocked this latter part of the plan. It will allow people to use their accounts to log in to the Admiral app, and for verification purposes, but will not allow the insurer to view users' posts to work out discounts.

“I think Admiral were simply not informed enough on what rules were applicable,” said Abrahamsson.

“Before I started this company I was working at Twitter, and I know how extremely important it is when you do anything with social media is to get expert help when using the data.

“The interpretation of the data is tricky. How do you look at a person's Facebook data and determine whether someone is more or less at risk?”

Abrahamsson said there are ways in which data from social media can be used legitimately, for example to verify a person’s identity.

“One big issue for many insurance clients we're working with is around the verification of users – determining whether this person really is an actual person, or whether it is a fraudulent set up,” he said.

“That's where Facebook can be extremely useful for verification purposes because they have a great algorithm for figuring out if this person is human or not and you can get access to that. It’s fantastic and it’s available for insures to use.”

Digital Fineprint was set up with the idea of helping consumers find the right insurance policy for them.

The rationale was to make the process more efficient by leveraging their social media profile to establish what insurance coverage they would need. But all this requires the permission of the customer.

“So there's a big difference there between the user using our services to find out what product is useful for them versus Admiral effectively spying on your posts, and saying how much you are going to be paying for your car insurance,” Abrahamsson said.

Since the troubled launch of Admiral’s app, Abrahamsson said four insurers have reached out to the insurtech start up to build working apps that help protect the user.

“I think there are amazing opportunities for insurance companies when we use social media in the right way. The companies of the future who will make it are the ones who able to use this client base and technology in good ways for the consumers. If they can there are great opportunities to be had, and if they don't the same thing is going to happen as did with Admiral.”

Intelligent InsurTech Europe will take place at the Grange Tower Bridge Hotel on Wednesday November 16.

To find out more about the most anticipated insurtech event of the year,  visit the Intelligent Insurtech Europe website.