Someone contacted me recently after moving in with his significant other (SO). The SO owns the house and insures it on an HO-3 policy. He insures his own property and liability on an HO-4 renters policy.

When he received the policy, he noted that the insurer had, without his input or agreement, added his SO as a named insured. He was told by the underwriter that they knew of her residency from “publicly available information.” After he explained the situation, the underwriter agreed to remove her from his policy.

Has anyone encountered this, where an insurer makes unilateral coverage changes based on information gathered from public records (which are notoriously unreliable), social media, etc.?

I have the same concerns about the overreliance on data and information that hasn’t been vetted or qualified by the insurer. I wrote about this in a blog post:

Our son moved out of the house three years ago and we removed him from our insurance program, including his vehicle. He still uses the same agency (different insurer) I’ve used since 1973 to insure his auto, condo, and personal umbrella.

Our insurer learned that his vehicle registration notice is still mailed to our address. With that information, they (i.e., their underwriting model) unilaterally concluded that he still must live here, so they added him back to our insurance program and made him the primary driver of one of our three autos (the most expensive one, of course).

I’m not sure what they thought happened to his vehicle. But, of course, no one “thought” about anything. An algorithmic decision tree spit out a boiler-plated invoice.

I’ve been with this carrier now for four years, loss free, and paid them somewhere in the neighborhood of $20,000 in premiums, yet they could not invest 10 minutes of a clerical person’s time to make a phone call and confirm my son’s residency.

Neither we nor our agent received any notice or inquiry prior to the invoice, but my agency CSR (who, thankfully, is still an empathetic human) was able to quickly fix the problem.

In the same article, I wrote about my bad experience with insurance scores where twice I received significant premium increases based on faulty credit data. In other articles, I’ve written about online homeowners quotes where the calculation of Coverage A limits on my dwelling were based on county tax records used by real estate web sites that understated the size of my home by 1,000 sq. ft. The average consumer would quite possibly not challenge these kinds of information errors.

Is it going to get worse with “black box” rating using secretive, proprietary algorithms that may be discriminatory, noncausal, or rely on erroneous data?

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Bill Wilson

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One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information