In years past, insurance policies were based largely on broad demographic categories like age and gender. Now, with the vast range of data insurers have access to, consumers are charged not just based on their objective risks but also based on how much they are willing to pay — a practice called price optimization. To make those predictions, insurers gather and analyze data about individuals to create detailed personal profiles, looking at everything from whether you smoke cigarettes to your shopping habits to which internet browser you use.

To determine that magic price tag, insurance companies drill down into the nitty-gritty details of your life. They might look at your home’s roof using drones and automated image analysis, or where you’re driving based on data from a smart device in your car, or what kinds of foods you’re eating by looking at nutrition trackers. They might also look at your credit score, ZIP code, social-media posts, and battery-charging habits. This data can then be used as proxies for social categories like class and race or to make moral judgments about your personal responsibility, which factor into decisions for prices and policies.

Sadowski, J. (2023, October 23). Insurance companies have discovered devious new ways to rip you off. Business Insider. https://www.businessinsider.com/insurance-companies-get-you-to-pay-more-deny-claims-2023-10