I have a very healthy diet, but I buy all of my produce at markets that only accept cash. I wonder what conclusions an insurer would draw from my supermarket purchases (mostly meat & dairy)?
That you're a fattychunks and need to be charged a higher premium to compensate for your vegetable-free diet. /s
Data mining is very hard to get right. Suppose I swipe my card at McDonalds every few days. That charge alone doesn't even mean I'm eating unhealthy food. I could be buying food for the homeless dude outside, or just buying bottle after bottle of Dasani for lulz.
People do unusual and unpredictable things all the time.
Remember, this isn't a court where you get to argue your individual case. If data mining starts affecting insurance premiums, you probably aren't going to notice. The insurance company is not going to say "because of your daily McDonald's purchases...". They're just going to say, "effective 6/6/2020, your rate is $x".
People that do "unusual and unpredictable things all the time" are so rare that they don't matter at the scale of data mining. Most people do usual and predicable things, and that assumption is probably worth money.
However, a number of factors have to come together for this to work. First, the insurance companies need to correlate purchases and insurance claim rate. Then insurance companies need to secretly implement this plan. Then when you get the letter that says your premiums are being raised, they need you to not switch to a competitor that is undercutting their new rate. And finally, they'll have to avoid the rage of citizens and legislators. With their upcoming special status in 2014, it's unlikely that lawmakers are going to let insurance companies do whatever they want.
So ultimately, being different isn't going to protect you from data mining, but I think the market will. Do you want to be the first company to announce they're spying on your purchases? Do you want to own the grocery chain that's known as the spying one?
Your comment, if I follow, seems to assume I was making the argument that being different would protect against data mining for underwriting purposes; I didn't. The argument I was making is it's likely to unfairly penalize some people because their actions aren't in line with the majority or the expected.
I honestly do believe that it's easy to position consumer data mining as a good thing by initially offering it as an option with the promise of "fairer" rates. Some people will be happy to donate their spending habits to get a discount. This optional program is likely to become less optional over time as people become more used to the idea of sharing their spending habits. After all, that's what we're doing with loyalty card schemes already, isn't it? Credit scores are the epitome of this kind of program.
All those grocery store loyalty programs...they are already spying on you. And since the data is there, it's a nice asset to sell quietly to somebody else who could make use of it, like insurance companies. It's not a stretch because the data has been collected for years and nobody cares.
The person you replied to didn't state that the data is already being sold, however a quick Google search reveals concrete examples of this already being the case in the UK, which has relatively strong privacy protections: http://www.guardian.co.uk/business/2005/sep/20/freedomofinfo...
Multi-billion dollar company that does nothing but buy and sell that kind of data. They have categories of information about people that only the government is allowed to access.
Yup, I am in the same position. A scan of my debit card purchases would reveal a very low calorific intake however. The obvious solution is just to use cash for everything.
