Insurers Look to Social Media For Fraud, Lifestyle Issues.
Insurers are scouring social media for evidence of fraud
If someone receiving disability benefits for a bad back brags on Facebook or Twitter about finishing a marathon, chances are their insurance company will find out and stop the checks.
By Shan Li
January 25, 2011, 6:40 a.m.
Now there's another reason to be careful about what you post on Facebook: Your insurance company may be watching.
Nathalie Blanchard found out the hard way.
Struggling with depression, the 30-year-old from Quebec, Canada, took a medical leave in early 2008 from her job as an IBM technician. Soon after, she began receiving monthly disability benefits from her insurer, Manulife Financial Corp. A year later and without warning, the payments stopped.
A representative of the Toronto insurance company told Blanchard that Manulife used photos of her on Facebook — showing her frolicking at a beach and hanging out at a pub — to determine she was depression-free and able to work, said Tom Lavin, Blanchard's attorney. "They just assumed from the pictures that she was a fraud," Lavin said, "without investigating further before terminating Nathalie's benefits."
Blanchard sued Manulife, accusing Manulife of failing to talk to her doctor and neglecting to inform her before cutting off payments. The case is scheduled for trial next January.
Manulife, citing ongoing legal proceedings, declined to comment on the case but said in a statement: "We would not deny or terminate a valid claim solely based on information published on websites such as Facebook."
Social-networking websites such as Facebook and MySpace have become the go-to places where employers, college admissions officers and divorce lawyers can do background checks. Armed with the information, police have caught fugitives, lawyers have discredited witnesses and companies have discovered perfect-on-paper applicants engaged in illegal or simply embarrassing behavior. And now insurance companies are exploiting the free, easily accessible websites.
Such sites have become the latest tools in detecting fraud, which the industry says costs the U.S. as much as $80 billion a year and accounts for 3% to 10% of total annual healthcare spending. Investigators who once followed people with cameras now sit behind desks "mining databases and searching Facebook," said Frank Scafidi, spokesman for the National Insurance Crime Bureau, a nonprofit that investigates suspect claims for insurance partners such as Allstate and State Farm.
"They look out for things that don't add up," he said, "like someone who claimed they hurt their back too badly to work and then bragged on Facebook about running a marathon."
Social-networking sites have become such "standard tools" that Peter Foley, vice president of claims administration at American Insurance Assn., said that investigators could be considered negligent if they didn't conduct at least "a quick scan of social media to check for contradictions." But the evidence gathered on these sites, Foley and other insurance experts caution, should be used only as a launch pad for further investigations and never as final proof of fraud.
More ambitious insurance companies are even exploring the possibility of using online data to help underwrite policies.
Celent, the insurance consulting arm of financial and insurance brokerage firm Marsh & McLennan Cos., recently published a study titled "Leveraging Social Networks: An In-Depth View for Insurers" and suggested that social-networking data could be used to help price policies.
Mike Fitzgerald, a Celent senior analyst, said life insurance companies could find social media especially valuable for comparing what people will admit about lifestyle choices and medical histories in applications, and what they reveal online.
That could range from "liking" a cancer support group online to signs of high-risk behavior. "If someone claims they don't go sky diving often, but it clearly indicates on their online profile that they do it every weekend they can get away," Fitzgerald said, "that would raise a red flag for insurers."
Social media is "part of a new and emerging risk to the insurance sector" that could affect pricing and rating of policies in the future, said Gary Pickering, sales and marketing director for British insurer Legal & General Group. But many insurance lawyers decry such practices and warn of a future when insurance companies could monitor online profiles for reasons to raise premiums or deny claims.