September 11, 2007

If Insurance is the Answer to Identity, what's the Question?

Over on Second Life, they (LL) are trying to solve a problem by providing an outsourced service on identity verification with a company called Integrity. This post puts it in context (warning, it's quite long, longer even than an FC post!):

So now we understand better what this is all about. In effect, Integrity does not really provide “just a verification service”. Their core business is actually far more interesting: they buy LL’s liability in case LL gets a lawsuit for letting minors to see “inappropriate content”. Even more interesting is that LL does not need to worry about what “inappropriate content” means: this is a cultural question, not a philosophic one, but LL does not need to care. Whatever lawsuits will come LL’s way, they will simply get Integrity to pay for them.

Put into other words: Integrity is an insurance company. In this day and age where parents basically don’t care what their children are doing, and blame the State for not taking care of a “children-friendly environment” by filing lawsuits against “the big bad companies who display terrible content”, a new business opportunity has arisen: selling insurance against the (albeit remote) possibility that you get a lawsuit for displaying “inappropriate content”.

(Shorter version maybe here.)

Over on Perilocity, which is a blog about the insurance world, John S. Quarterman points at the arisal of insurance to cover identity theft from a company called LifeLock.

I have to give them credit for honesty, though: LifeLock admits right out that the main four preventive things they do you could do for yourself. Beyond that, the main substance they seem to offer is essentially an insurance package:

"If your Identity is stolen while you are our client, we’re going to do whatever it takes to recover your good name. If you need lawyers, we’re going to hire the best we can find. If you need investigators, accountants, case managers, whatever, they’re yours. If you lose money as a result of the theft, we’re going to give it back to you."

For $110/year or $10/month, is such an insurance policy overpriced, underpriced, or what?

It's possible easier for the second provider to be transparent and open. After all they are selling insurance for stuff that is a validated disaster. The first provider is trying to cover a problem which is not yet a disaster, so there is a sort of nervousness about baring all.

How viable is this model? The first thing would be to ask: can't we fix the underlying problem? For identity theft, apparently not, Americans want their identity system because it gives them their credit system, and there aren't too many Americans out there that would give up the right to drive their latest SUV out of the forecourt.

On the other hand, a potential liability issue within a game would seem to be something that could be solved. After all, the game operator has all the control, and all the players are within their reach. Tonight's pop-quiz: Any suggestions on how to solve the potential for large/class-action suits circling around dodgy characters and identity?

(Manual trackbacks: Perilocity suggests we need identity insurance in the form of governments taking the problem more seriously and dealing with identity thefts more proactively when they occur.)

Posted by iang at September 11, 2007 05:57 PM | TrackBack
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