as far as most insurance is concerned, right now you know that i am a 26 year old male. my auto insurance company knows that i haven't gotten a ticket in years and have never been in an accident. my health insurance company knows my medical history, and since my company has life insurance on me, you tested me for drug use, blood pressure, and a few other things relatively recently to help generate an insurance rate for me... but please, you know as well as i do how arcane this all is. let's make a few deals based on the modern reality of truly scaled data and analysis. here are a few deals i propose:
1. autos: i will throw a gps unit on my car for you and let you pipe down how much time i am spending driving, my location, and my speed at all times -- since i don't drive all that much, don't speed, and generally don't drive during high accident periods of the day (late night/rush-hour?) in high accident areas (i assume) i will happily trade you the data feed for lower rates.
if you want to play it even closer to the bone (i would be happy to) -- why don't you adjust my rates in realtime as i drive. if i am speeding, driving during prime accident times of the day, driving long hauls and thereby getting tired, or maybe just swerving a lot (check the accelerometer) start changing my rates on the fly. right next to the speedometer, why don't you add your quoted rates by speed, in $ of insurance / minute / speed -- then i can make a call about how fast to drive based on your up to the second rate. if you prefer me to drive at a specific time of the day, because i will be more alert or there are fewer other cars on the road, just let me look up the day's rate table. my car gives me a real time quote of the most fuel efficient speed at which to drive, how about giving me a realtime quote of the most insurance cost effective way to drive...
shall we go even further - why don't you mix in weather data... assuming accidents happen more often when it is raining, why don't you raise my rates on the fly if a storm is rolling through my current location. or, grab the weight of the car off the shocks -- more people in the car is probably a distraction,... meaning i am probably more likely to crash. i would bet money you even know the rates of accidents with people making right vs. left turns, or using specific streets.... why don't you do a route calculation for me on the most cost effective way to get to my destination (a la ups only making left hand turns) -- of course, everything is opt in - but why not trade with me...
2. health/life: i offer a few things, which are probably even more fun. first, how about i wear a heart rate monitor for you at all times. second, i will let you check my location off my phone whenever you want. then we can start trading on much more fine grained metrics. do people who get seven or eight hours of sleep generally live longer/have fewer health problems?, offer me better rates if you can observe me behaving well and getting enough sleep. does my gps feed seem to indicate that i am going to bars too often and too late, really - you should jack my rates -- but if i go home early i think i am entitled to a discount.
am i going to mcdonalds too frequently, and not shopping enough at whole foods?... you can start making really good guesses about how i live, and what your real exposure is on me. heck, want my credit card data, i will ofx that over to you right now -- surly purchases from certain merchants correlate highly with risky/less risky behavior. is my high rate of travel a liability? am i at the gym regularly? it is all at your disposal, just make sure you talk to the hardoop folk, you are going to need map/reduce.
shall we get really scary with totally available technology? why don't you pull my friend graph via facebook connect. now, start matching my gps feed & heartrate, etc. with those of all my friends, relationship statuses, etc. you can tell a lot by whom i hang out with. is everyone around me high risk? then i probably am also... do their credit cards charges indicate they smoke, and their gps feeds show they go out too late? there is signal in there for you.
now, give me back a relatime set of decision making tools... next to every menu item at a restaurant, why don't you quote me a different insurance rate. the ribeye is $32, and the insurance cost is $2.25, where the salad is $15 and the insurance cost is $0 (or maybe even -$20). the first drink of the evening at 10 pm costs $10 and $1 of insurance, the tenth drink on a tuesday night at 3am costs $10 and $10 in insurance. the first girlfriend is free, the 50th girlfriend costs $25 a day. sleeping only 4 hours a night costs $14.95 a day, but sleeping 10 hours costs -$25.00.
ok, maybe getting a bit silly towards the end -- but really it isn't that far off. there is a wealth of new types of data which can be cheaply and efficiently collected, saved, analyzed, and used -- and the insurance folks should be getting into this game asap. to recap, here are the easily accessible data-series i want to use to trade with insurance companies:
gps onboard in my car (location, speed, acceleration, amount of driving, distance of driving per trip, etc.) +
realtime traffic +
time of day +
local weather +
weight of car (indication of # of people in the car) +
cell phone gps (location for stores i go to, bars, clubs, how late i stay out, how much i move, etc) +
heartrate (general health, sleep, etc.) +
personal accelerometer (sleep, health, etc, -- fitbit?) +
social graph (friends & their behavior, relationship status and frequency) +
credit card statements (what do i buy via ofx) +
my wii fit scores -- :) +
my video game activity (xbox live score) -
i could, i am sure, keep going - but the point is that all of this stuff really is now practical - which should be lower rates for some people, higher rates for others, more economic rationality (good), and almost certainly a ton of regulation (ambiguous).