One of the more discussed developments in the field of media is that platforms are converging: tv companies are going online, telcos are providing streaming services, radio channels are becoming online media and so on. This convergence or “vertical integration” is of course challenging for law-makers and courts that have to apply antitrust laws to completely new cases.
Vertical vs horizontal integration:
Source: Wikipedia Commons / Martin Sauter
Technological developments in the communications industry are also affecting how other markets work. Let’s take the example of banks and insurance companies.
Insurance premiums are, somewhat simplified, based on calculating risk. In order to calculate what a person’s life insurance premium should cost, factors like age, work and medical history are taken into account. These factors determine the probability of the insured falling ill or getting into an accident. The more detailed information on the insured’s life, the better.
Banks (and several app developers) are waking up to the fact that electronic payment means that it is possible to know a whole lot more about their customers than in the cash and check days. Consumers can click away and define every single purchase they make, be it clothing, food, home electronics or alcohol. A great service for the banks’ customers, who can plan their home economy better than before and pinpoint where their salaries are going. Or as Pridmore and Zwich (2011, 273) would have it, “[c]onsumers often happily participate in the personal information economy and the surveillance practices that underpin it. ”
In some countries, insurance companies and banks are converging – either insurance companies begin to provide banking services or banks buy insurance companies. This way customers can choose to buy their insurance and their bank services from the same provider – often at a better price. This is when it gets interesting.
The consolidation of banking and insurance data means that, theoretically, insurance companies could adjust insurance premiums according to the purchases being made by the same company’s banking clients. Failed to renew your gym membership, money spent on alcohol gone up two thirds? Several visits to the doctor in the past months? Perhaps the next insurance premium won’t be as affordable.
The question is, are the new banking services provided with the consumer in mind, or is this simply another way to solicit data from people in order to create business elsewhere? One thing is certain: insurance actuaries would love to have access to that data.
Pridmore, Jason and Detlev Zwick. 2011. Editorial: Marketing and the Rise of Commercial Consumer Surveillance. Surveillance & Society 8(3): 269-277.