The life insurance industry is on the verge of a huge transformation following the development of new facial analytics technology. The new technology could dramatically speed up the application process and provide a new line of defence against dishonest applicants.
A US technology company1 is currently rolling out the technology to several undisclosed American insurers on a trial basis. The technology is essentially a computer program that analyses an individual's face through a "selfie", and then applies big data analytics (knowledge of other faces) to provide a snapshot of the individual's health.
Some of the proposed uses of the technology are:
- enhancing online approvals - Facial analytics technology could widen the class of applicants that could be approved for insurance and provide insurers with an extra layer of certainty about applicants, without the extra cost and time delays associated with obtaining medical reports;
- improving analysis of the insured's health - The technology is able to estimate an applicant's BMI and how quickly a person is aging biologically (as compared to chronologically). It is also being explored how the technology might be used to provide accurate lifespan estimates and detect illnesses such as diabetes, heart disorders and dementia;
- catching out non-disclosures - This technology could be used to flag health indicators at odds with the information provided by the applicant. For instance, a feature is currently being developed that would enable insurers to identify smokers, whether current or former, by certain facial indicators such as wrinkles around the eyes; and
- future capabilities - There are already discussions as to how this technology could link to an applicant's social media profiles to help predict lifestyle habits and risks.
KEY IMPLICATIONS FOR YOUR BUSINESS
- Consider the technology in the context of your business - Applied sensibly, this technology has the potential to greatly assist with underwriting risk assessment. In most cases, the technology, once perfected, would be useful as one more string to the insurer's risk assessment bow.
- Discrimination - Insurers need to be careful only to use the software to make decisions that can be supported by empirical evidence. If a decision not to insure an individual, or load a premium, cannot be justified on empirical evidence, then an insurer may be guilty of unlawful discrimination.
- Privacy - Uploading a photo to your insurer is less invasive than a medical examination. However, applicants will want to know what is being done with their photos. Insurers should develop a plan for using this new source of data in accordance with the Australian Privacy Principles. Most relevant is the principle that personal information obtained for one purpose may not be used for another purpose without consent.
- Undermining the insurance industry - There is also the prospect the general public could gain access to this same technology prior to insurers and utilise it to determine whether life insurance is necessary for their circumstances. This could lead to only those at higher risk taking out life insurance, thus driving premiums upwards and reducing insurers profits.
1Lapetus Solutions Pty Ltd