In Wilmington, N.C., a high-tech company called Lapetus Solutions has developed a technology it calls Chronos that interprets facial characteristics such as baggy eyes, rosy cheeks and double chins to estimate a person's life expectancy. One purported use of this futuristic-sounding software is to help insurance companies assess risk quickly and inexpensively. Customers could then purchase life insurance online in record time, perhaps circumventing the usual medical examination altogether.
And Lapetus isn't the only company using cyber data to assess health and longevity.
Is this truly the future of insurance underwriting and sales?
"This concept is really at the infant stages," says John Rodgers, chief operating officer and head of financial services, insurance and retail at New York City-based SSA & Co., a strategic consulting firm for corporate clients. "It will take some time to understand how accurate the technology is. I don’t think it will be perfected within the next three years."
Accuracy is one thing, but what about the morality of essentially judging someone based on looks? It’s a time and money saver, to be sure, but isn't it invasive? And what about using makeup and photo-altering techniques to game the system?
"Beyond the accuracy, the moral hurdles will be the biggest for this technology," says Rodgers. "Clearly, as the technology advances, as long as facial recognition proves to provide better predictive capabilities of health, the insurance companies will prefer to use it. However, my guess is there [would be] significant resistance from the public, which could create some PR risk for a historically conservative/risk averse industry."
Of course, much of life and health insurance eligibility is already based on actuarial data that may seem random or invasive—statistical models, demographic averages, assumptions about lifestyle, even gender. "The entire industry is based on risk," notes Rodgers. "The value of insurance in general for the consumer is to protect against the unknown. Risk is shared among multiple consumers, and the insurance company wins on some and loses on others, thus creating a balance."
In theory at least, insurance carriers want to provide coverage only to those less likely to need it. The better the carriers understand and predict risks, the better they can manage their liabilities. So if facial recognition technology identifies risks that were previously unknown or unknowable, it could render some consumers uninsurable, an advantage perhaps for the insurance company but not the consumer.
"This will reduce the overall risk to the insurance company and transfer all of that risk to the consumer," says Rodgers. "The balance would be if overall rates would fall for the 'healthy' consumers. However, the question is how quickly those rates would fall against the speed [and] accuracy of the facial recognition predictive capability."
But Erin Ardleigh, president and founder of Dynama Insurance, an independent insurance brokerage based in New York City, isn't so sure. "How would facial recognition technology help underwriters? I suppose if it could identify clients [who were] engaging in risky behavior, such as smoking or skydiving," she says.