Insurance Telematics Data Privacy: More Questions than Answers
As auto insurance savings grow, privacy concerns shrink. That, at least, seems to be the trend: Customers who get lower UBI premiums tend to be less concerned about how telematics will affect their privacy. Last September, Robin Harbage of Towers Watson said that customers “are learning UBI can offer many benefits, including lower monthly premiums, which outweigh their privacy concerns.”
Still, privacy questions remain. For example … Will telematics data simply be used upfront for underwriting and pricing, or will it also be used to validate claims facts for individual drivers? Can carriers share or even sell telematics data – either in the aggregate or at an individual level? Is telematics data discoverable? To delve into these issues further, we’ve provided an overview of industry conversations and updates below.
How can telematics data potentially be used?
- Policy pricing and underwriting on an individual driver level
- Better understanding of segment risk through big data analysis
- Safe driver coaching
- Geo-fencing for teens or senior drivers
- Fraud deterrence
- Claim fact and witness validation
- Overall auto insurance program cost containment
What concerns remain?
While all potential data uses above seem positive, some make privacy advocates feel a bit squirrelly. In a court of law, for example, lawyers could rely on the data to build their cases, said Auto Guide. Indeed, privacy agreements “make it clear … that telematics data can and will be released to the courts and law enforcement if necessary.”
It’s important to note that vehicle data collection goes beyond insurance. “If you’ve bought an automobile in the last ten years, chances are that it has an event data recorder … to record your speed, rpm, engine load, temperatures, acceleration, braking, steering input, the physics of any collision and other data,” said Klieman & Lyons. This data is useful in processing claims as noted above. It can also be requested for the purpose of litigation.
Because event data recorders come installed in many new vehicles, even drivers who don’t opt for insurance telematics may not steer clear of data collection.
What about the sale of telematics data?
The topic made it into the news again recently when Allstate announced that it “hopes to profit from the sale of telematics data and then pass on savings to consumers by lowering premiums,” said Insurance Business Online.
As the article points out, monetizing data is nothing new: Google sells personal data, too. Most users are comfortable with this, knowing that when data is packaged in the aggregate, individual details remain anonymous. Still, some consumers feel differently about the sale of telematics data, which is “one of the reasons roughly half of the driving population in the US views telematics negatively, according to a 2014 survey from Deloitte.” But so far, there’s little pushback from policyholders. “You’ll see a rapid uptake when the pricing technology is right,” Allstate CEO Tom Wilson said.
On a related note, there has also been talk of car manufacturers selling telematics data to insurers. When it comes down to it, who really owns the data? Is it the person who owns the car, or the manufacturer or the car? If the data is collected directly by the insurer, either via a smartphone app or an OBD device, does the individual or the insurer own the data? In a claims situation, could one insurer opt to sell or purchase telematics data from the other driver’s vehicle?
Only time will tell. The answers to many of these questions are still being written.
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