Dear Commons Community,

The New York Times has an op-ed today commenting on the onset of artificial intelligence (A.I.) applications in the insurance industry.  It raises important issues regarding privacy.  Here is an excerpt:

“A smartphone app that measures when you brake and accelerate in your car. The algorithm that analyzes your social media accounts for risky behavior. The program that calculates your life expectancy using your Fitbit.

This isn’t speculative fiction — these are real technologies being deployed by insurance companies right now. Last year, the life insurance company John Hancock began to offer its customers the option to wear a fitness tracker — a wearable device that can collect information about how active you are, how many calories you burn, and how much you sleep. The idea is that your Fitbit or Apple Watch can tell whether or not you’re living the good, healthy life — and if you are, your insurance premium will go down.

This is the cutting edge of the insurance industry, adjusting premiums and policies based on new forms of surveillance. It will affect your life insurance, your car insurance and your homeowner’s insurance — if it hasn’t already. If the Affordable Care Act’s protections for people with pre-existing conditions should vanish, it will no doubt penetrate the health insurance industry as well.

Consumers buy insurance from companies to protect against possible losses. But this contractual relationship is increasingly asymmetrical. The insurance companies once relied on a mix of self-reported information, public records and credit scores to calculate risk and assess how much to charge. But thanks to advances in technology, the capacity to collect, store and analyze information is greater than ever before.

2018 report from the consulting firm McKinsey notes that “smart” devices — fitness trackers, home assistants like Alexa, connected cars and smart refrigerators — are proliferating in homes. The “avalanche of new data” they can provide will change the face of insurance…

…Artificial intelligence, in all its variations, holds great promise. The automated processing can help cut down costs, and even save lives. But the  opacity around many applications of automation and artificial intelligence are reason for pause. Not only do people have limited access to the code that determines key facets of their lives, but the bar to understanding the “reasoning” of algorithms and data sets is high. It will get higher as more industries begin to use sophisticated technologies like deep learning.”

Tony

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