Your Data or Your Life

Well, if you didn’t believe it before, you should now. Data is the new currency. 

If you are only focused on dollars, pounds, euros or even bitcoins, it’s time to recalibrate your financial perspective. Need proof? Take a look at the Target data breach. Who needs to rob a bank when you can buy malicious software from a 17-year-old Russian kid to mine the payment data on millions of customers? The next generation of criminals doesn’t want your money—it wants your data.

Take a look at the Terms of Service of nearly every free online company. You’ll find tech companies valued in the billions that charge no fees to customers. The next generation of companies prefers your data to your money.

It’s a new world, and it’s the Wild West out there. Every investor who ever arrived late to the game on a hot trend wishes he’d been tipped off. I’m here to grant that wish. Wake up! You’re missing the boat.

The Good: Data as a Value Add

Using customer data is quickly developing a bad rap, but it doesn’t have to be this way. While some companies are focusing on using their customer’s data for the benefit of the company, the smart ones are using that data for the benefit of their customers. As insurance agencies, we are in the envious position of receiving a tremendous amount of data on our customers’ businesses, risks and activities. Well-rounded agencies also have access to employee information from payroll to health benefits and likely extended personal information related to our customers’ executive leadership. This is a treasure trove of highly valuable, highly localized, current data. Data aggregators, advertisers and other companies can and do pay top dollar for this sort of trend data. But we’re not evil. We are trusted advisors to our customers. In many cases, we accept fee-based compensation from them. 

So what’s a light-side-of-the-force agency to do with this data? Ignore it? If your customers are like mine, they are focused on growing their business organically but not their risk management. And they likely consider your agency to be their source for counsel. Many agencies provide trend and coverage information to their clients, but how much of this information is actually about the individual customer, created using only the customer’s activity and risk data? Probably not much.

Get a handle on this data, find meaningful trends and give that insight back to your customers. If you do, you will secure your customers for life. On the other hand, if you wait around for your competitors to tame this frontier, you will never catch up.

The Bad: Selling Data

Facebook, Google, Apple, Microsoft and many others are doing it. Retailers are doing it. Even governments are doing it. There’s value in data, and companies will pay for it. If you need help understanding this value, just look at your producers. If they use Hoovers to research prospects, they’re buying data. Much of this data is publicly available, but if you are researching an important prospect, you’d surely find value in some proprietary data related to their current risk-management programs. It’s likely you are already a buyer of data, but should you become a seller?

If your agency were to manage a large book of trucking fleet business, you likely would have a massive amount of data related to the purchase, use and loss of commercial trucks. Do you think Ford Motor Company, Kenworth or Freightliner would be interested in buying this data? Don’t think too hard: The answer is yes.

But should you sell your customers’ data? This is where things get a bit icky. If I use Gmail—which is free—but in exchange I grant Google an ownership of all the information in my email, I am conceivably getting something in return. I’m trading my data for a service. But what if I buy a car and unbeknownst to me that car tracks everywhere I go and transmits that data back to the car manufacturer who sells that data to anyone willing to pay for it? I traded dollars for the car, not my data.

If you sell your customers’ data without their explicit consent, you are morally ambiguous at best and criminal at worst.

And what about the systems we use to manage our customers’ risk management programs? If your agency buys an agency management system, you are paying the vendor (quite handsomely, I’ll note) for the use of the system. What if the vendor aggregates the data you enter into the system and sells it on the open market? Would this be OK? Don’t think too hard: The answer is no.

It is the responsibility of our agencies to protect both our own data and the data of our customers.

The Ugly: Stealing Data

Details are still emerging, but it’s becoming clear that the criminals who stole the Target data didn’t actually use it to commit identity theft or credit card fraud. They sold it. So now we have a business-to-business criminal operation that follows a wholesale-retail model. Rather than risk arrest actually stealing identities and money, criminals can operate in the cyber shadows siphoning data with the sole goal of selling it to other criminals or anyone else willing to pay. Why is this attractive? Because stealing your personal data is a multibillion-dollar industry.  Stealing cash is inconvenient, requiring pesky laundering and significant risk. Cash is easy to trace. Data is intangible, untraceable and highly valuable. It’s the new currency. It’s time to protect it and use it for good.