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Friday, August 24, 2012

Proposal form in Insurance and posting personal info on Facebook

A tick or dash would not suffice – all Questions should be answered completely !!.... fortunate that you live in India, not in Europe and not given to too much of socializing in FB and other such media.

Insurance is a contract and the basic ingredients are ‘offer and acceptance’… the one who requires insurance has to propose and the Insurer would accept the proposal based on rate, terms and conditions and the final binding is upon payment of consideration – i.e., insurance premium. 

Proposal form is the basic instrument signifying the evidence of contract between the insured and the insurer. The insurer seeks to elicit all the material information, which is required for underwriting the risk through the use of this instrument.  It is important for the Insurer as their decision of Underwriting hinges on the details provided in the proposal form – all material aspects will have to be made known and the facts stated therein are binding on both the parties - failure to appreciate its contents might lead to adverse consequences from cancellation of the contract to denial of benefits arising under the policy. 

Yet, many a times, there are not proposals, or they are incomplete, or they do not contain all material facts – many a times, they are unsigned and mostly they are filled by somebody else and the proposer does not even care to read or try to understand what is being declared and signed ! – sad state of affairs indeed and Insurers are also party to not collecting fully complete proposal form.  Any overwriting / alteration will have to be authenticated to make it meaningful and reliable. The tenet of ‘utmost goodfaith’ puts the onus that all conditions known to the Insured must be made known to the Insurer and if the Insurer estops their right to ask for additional information based on the proposal, then the proposer is not at fault. 

If you have observed, generally proposals are designed in a manner that the elicit some basic details of the proposer including some personal details,  communication details and then proceeds to the more material side – of collection of details relevant to the particular type of insurance that is being sought to be arranged.  In medical insurance,  it would include basic information of the proposer; name, age, address, education and employment details of the proposer, income; medical history, pre-existing conditions etc.,

Too elementary for people who have been in Insurance field, one is likely to think ! – still we all know that we consistently fail at the basics. 

Daily mail reports that Insurers are  set to clamp down on 'grossly negligent' social media use that give crooks an easy ride.  The report states that Facebook users post an 'alarming' amount of personal information online.  Have you ever cared to think that a  simple 'check-in' at the airport could mean refused claims if your home gets burgled

According to the newsitem that appeared in Dailymail yesterday, Facebook users face losing claims against banks and insurance companies because they are inviting fraudsters to scam them by posting so much personal information online.  Anyone burgled after advertising holiday plans on social networks, or scammed after inadvertently leaving clues about their accounts or passwords online, could find they are left completely out of pocket. The crackdown is said to be ‘inevitable’ after experts warned that hackers are finding it easier than ever to commit identity fraud and predict it will start happening within a year.

It is stated that simply posting a picture of your car, or details about which phone network you use, is now enough for many scammers to be able to hack your computer and steal your bank details within minutes.  One example given included a man who faced losing thousands after a picture of his new car posted online gave scammers enough detail to trick him into opening an email, which appeared to be from the DVLA.(The Driver and Vehicle Licensing Agency of UK).  With online fraud costing banks and insurance companies billions every year, they are expected to start taking into account the streams of information willingly publicised by people on the websites when analysing claims within the next year.

Though Banks do not check a claimant’s personal social network information, don’t be surprised if this starts happening in near future.  It could be a moot point though whether such posting on social sites online could be construed as ‘grossly negligent’, leaving  the customer completely at their own risk to cover the cost of what they have had stolen. Most time, fraudsters send an official-looking document, which  would appear to be from some authorized Departments and the link when clicked would enable hacking providing easy access to the computer of the victim and thereby opening the gate to loads of personal information stored therein. 

A spokesperson of an Insurer writing Home Insurance is quoted as stating that it is  possible that insurers in future, could seek to access to the personal information posted in social media. Something like ‘places’ and ‘tagging’ on Facebook broadcasts people’s locations on a platform which has millions of users and insurers could easily access such information.

You can take solace that Indian Insurers are not contemplating any such move currently.

With regards – S. Sampathkumar.
24th August 2012.

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