Last month, California made headlines when Covered California handed out thousands of consumer’s information to insurance agents without their expressed interest to be contacted. According to LA Times reporter Chad Terhune, the names given were of people who had signed up on the Covered California website, but had not finished the enrollment process. Was this an act of assistance on the part of the state or a complete breach of privacy? The larger question is “should other states follow suit?”
Why Use an Insurance Lead Company?
Generally, insurance agents find insurance lead companies to locate potential clients. Lead companies are crucial in making contact with consumers, and businesses can grow substantially with their help. These companies offer a host of information for insurance agents from basic contact information down to personal details that might illuminate the type of insurance and coverage needed. LeadCompanyReviews.com explains that selecting a lead company is a complex process and a variety of factors make certain companies a better fit than others. Thus, insurance agents need to be savvy of current trends and offerings of different companies so they can get the most bang for their buck.
The Case of California
California, however, in a bold move, chose to hand out information that would typically be gleaned by insurance lead companies to a few major insurance providers. As Terhune reported, some consumers were not pleased with the contact from these providers, feeling that it breached their privacy as they did not want other parts of their application shared. Covered California maintained that social security numbers, income, and other bits of personal information were not shared and thus, no privacy violations were committed. Further, the agents who were given this information were not allowed to use it to sell other products, as The LA Times reported. However legal this is, the question remains of how helpful this type of sharing of consumer information might be for other states.
The Pitfalls of Sharing Information
As an entity, the state has a right to collect information about its residents. If there is any one entity to be trusted when it comes to personal information, the state is responsible for protection from ne’erdowells. So then it follows that if personal information is given out by the state, it is for good reason. In California’s case for example, the state was overwhelmed with the amount of applications filed under Covered California, and sought to help people by connecting them with providers quickly. The intent was to make their residents happy and provide a service. However, the speed with which information can get mishandled is swift. From identity theft to telemarketing fraud, the risk is very real in the age of the Internet. According to the US Department of Justice, in 2012, approximately 16 million people were victims of one or more incidents of identity theft. Of these people, some spent over a year recovering from the damage done to their credit. While the state may not have had any ill intent in sharing information, once out there, it could have been mismanaged by others entrusted to it.
Information at a Cost
Interestingly enough, PWC research finds that 76% of consumers are willing to share personal information in exchange for some sort of free service. This number increases to 82% in younger consumers when free internet service is offered, indicating that despite the pitfalls of sharing information, consumers are willing, given the right incentive. In California’s case, consumer information was already stored on the database, as it was willingly and knowingly submitted in the hopes of making contact with insurance agents. California merely sped up the process by giving this information to the service providers consumers had originally sought. If other states follow suit, the incentives for consumers will need to match the worth of their personal information. As risky as sharing information on the Internet can be, PWC research shows that only 19% of consumers are bothered by unsolicited contact by unknown companies. The benefits of services desired might be worth the cost of handing out consumer information.
Adam is an insurance broker who has used networking to build his successful small business.