Have you noticed Uber and Snapchat’s updated privacy policies? They are decidedly user-friendly and seem to suggest a shift in how tech companies are approaching digital transparency, a quality tech giants aren’t exactly known for advocating. One wonders if it has anything to do with what’s going on overseas. In May 2018, the European Commission will begin to enforce a set of personal data regulations they decided on just over two years earlier. This landmark legislation is the strictest yet in enforcing user data protections, or digital rights. It includes clauses like the ‘right to be forgotten,’ whereby citizens can ask companies to delete all personal data they have on them for a wide latitude of reasons, including irrelevance. If companies fail to comply with these regulations, they face fines potentially running into the tens of millions. This piece of EU legislation is just but one swell in the growing tide of consumer data rights. Insurance companies will have to choose what side they are on as the issue of digital rights comes to a head. It’s a chance for insurance companies to shed the image of being technologically backwards and enter the digital age not merely catching up, but boldly forging a new path forward. Taking a stand for digital rights by encouraging pro-legislation and endeavoring new means of digital transparency and consumer control over personal data, promises an attractive future for insurance companies.
Digital transparency does, at first blush, seem counter-productive, even self-sabotaging; “Look at Google and Facebook,” one might say, “They have rapaciously grabbed up data, without any compunction whatsoever, and have been hugely successful by doing so. Why should the insurance industry not follow the same path?” Well, in the first place, the insurance industry is not predicated on gathering, packaging, and selling data, but rather selling insurance, so gathering data is only beneficial to insurance companies insofar as it raises the profit/policy ratio or increases the overall policies sold rate, not for its own sake. Now, insurance companies could diversify into the data business and thereby become more than strictly insurance companies, yet, even if this grand shift in business model is feasible, the aforesaid fact that the digital rights movement is rapidly expanding provides a fortiori reason for insurance companies to avoid what I dub ‘the mercenary approach’ to data, i.e. vacuuming up as much data as possible, metatizing it, then selling it for fat fees while keeping consumers in the dark and doggedly fighting any legislation that might undermine this process. The mercenary approach has worked thus far for the data giants, but the EU legislation has been a hard slap in the face, an ice-cold bucket of water. Google, Facebook, et al are fighting a losing battle. And, the more they fight, the worse they look and the worse off they will be in years to come.
Think of their position in comparison with the tobacco companies: the tobacco industry has become the gold standard of unscrupulous corporate practices and has been unilaterally maligned for it. And rightly so, since, for decades they fought the evidence of smoking’s harmful effects and legislation and public awareness campaigns to curb smoking rates all the while knowing full well their mendacity and deceit. If data giants act as the tobacco companies have, that is, stubbornly resisting reform in the face of an overwhelming shift in public opinion, then their fate will be far worse than the tobacco companies’, for they will not merely take a big hit in profits, but will most likely recede (or perhaps plummet) into oblivion, since they don’t have a highly addictive product to guarantee them steady income. So, even if insurance companies wanted to start selling data, they would be judicious to do so using transparent methods. Otherwise, they face potential public humiliation, enormous financial loss—in short, a generally unhappy situation. Thus, to move towards digital transparency is to move away from digital disaster.
Besides avoiding disaster, there are excellent (logically) positive reasons why insurance companies should implement digital transparency. If I am right, if public opinion is increasingly turning in favor of data transparency, and even ownership, then any company that takes it upon itself to begin consumer-friendly data practices will, put simply, look really good. People will buy from that company just because they perceive it as ethical.
In fact, the ethical corporation is more en vogue than ever. Take Whole Foods for example, its entire business model is “we make sure our customers are provided with only artisanal, small-farm, organic, ethically cultivated, blah blah blah and know they will pay way more than the product is worth because of this.” Indeed, the principle that people will pay more for something just because they think they are making an ethical choice by doing so has become something akin to an immutable law of economics (if there is any such thing); let’s call it the ‘principle of value for ethics.’
This principle has some corollaries worth mentioning for my argument: 1) that people will purchase an identical product from one company rather than another just because they perceive that company as more ethical than its alternatives; 2) that people will buy a product just because they think they are performing a morally right action by doing so. The former corollary implies that an insurance company is better off becoming digitally transparent before its competitors, while the latter implies that even when all insurance companies are digitally transparent, they will potentially all still benefit by being so, because people will be more likely to buy an insurance product than refrain from doing so, given that they morally approve of the company selling it. Thus, given the principle of value for ethics, the entire insurance industry could become digitally transparent and still benefit, even though the early birds will get many more worms. So, the reason for an insurance company to be a champion of digital transparency is threefold: it will shed its image of being technologically backwards; it will avoid being swept up in the tide that is the digital rights movement; and it will attract more customers due to its being perceived as ethical.
So far, I have remained quite general when talking about digital transparency; but what does this actually look like? Unfortunately, there is not much room for detail here, but I will provide some rough-not-ready practices that can go a long way towards transforming the digital landscape. To wit, an insurance company could proliferate easy-to-digest infobubbles telling the customer it wants to collect such-and-such data for x specific purposes; this company could share all metadata it has on a customer with that customer (which might get her to agree to share her data freely in the first place); and this company could agree to delete any data once a customer no longer has a policy with it. And all this can be done while making digital rights a value point of the product and brand experience, i.e. capitalizing on the principle of value for ethics.
Again, much more could be said about this, but the reader gets the idea of how simple it is to practice digital transparency. The details should be worked out soon, however, as the expansion of digital rights is inevitable. What happened in the EU will sooner or later happen in the U.S. (most likely sooner), which presents a golden opportunity for insurance companies. Instead of waiting for the pot to boil over, or pertinaciously fighting the rising tide as the tech giants are doing, insurance companies can land on the shore well before the tide comes in—id est, they can take steps to revolutionize digital transparency.