According to The New York Times, your driving may be secretly scored as auto insurers increasingly monitor driving habits through data collection, impacting both insurance rates and privacy.
You are aware of your credit score. It may also be the case that you have a driving score.
Your driving habits, such as how frequently you brake hard, accelerate, use your phone while driving, or drive late at night, are all factored into your score.
You will find it more difficult to ascertain your driving score than your credit score. However, it is accessible to auto insurance providers, which may have an impact on your premium.
Auto insurers have been attempting to encourage consumers to sign up for programs, also known as usage-based insurance plans, that track their daily driving to better reflect the risk associated with the policy for the past 20 years. However, customers who value their privacy have been hesitant to enroll.
Consequently, the industry has adopted a different strategy, obtaining driving behavior data from automakers or from apps that drivers already own on their phones. Most consumers are unaware that the insurance sector can follow them in this manner, according to experts.
Following the disclosure by The New York Times that General Motors was exchanging driving records with LexisNexis, numerous lawsuits were filed by customers, leading the automaker to terminate its agreement with the data broker. However, information is still being gathered from applications and other automakers.
Consumers may benefit more from driving behavior analysis, or telematics as the insurance industry refers to it, resulting in more equitable and customized pricing. Furthermore, if reckless drivers must pay a higher price for their actions, they might drive more defensively, creating safer roadways. However, this will only take place if drivers are conscious that their actions are being observed.
Customers consent to the data collection and sale companies sharing their information with the insurance industry. However, because of the hazy consent procedure, individuals might not be aware of what they are choosing.
As stated by Michael DeLong of the nonprofit Consumer Federation of America, “Most consumers are put off by the idea of an insurance company riding shotgun.”
Smartphone Apps
The smartphone apps that are gathering driver data might not be immediately apparent. One is Life360, which parents use to monitor their kids. MyRadar provides weather predictions. GasBuddy lowers fuel expenses for users.
Additionally, all of these apps have optional driving analysis functions that use motion and sensor data from the phone. If a family member crashes, you can activate these features to receive alerts and ideas for a more fuel-efficient route to work. However, the analytics firm Arity—which Allstate created in 2016—supplies those functionalities in exchange for payment for data access. When users sign up for the features, it’s not made obvious that Arity also evaluates how dangerously they drive for insurance purposes.
For example, users can enable a feature on GasBuddy called “powered by Arity” that ranks how fuel-efficient their drives are. According to company representative Brandon Logsdon, users must first “agree to Arity’s Privacy Statement before they can use the Drives function.”
However, this agreement is located beneath a large red button that says “Join Drives” in a little gray text. The brief disclaimer only states that by selecting “Join Drives,” you consent to sharing “particular information” with Arity and clicking the hyperlinked privacy statement. The wording does not define Arity or what it does.
Tens of millions of people’s driving scores are sold by the corporation. According to Allstate’s website, auto insurance firms can “request a person’s driving score, which is delivered instantly.”
According to a blog post by Arity directed at insurance marketers, the ratings “look at drivers’ performance behind the wheel, including how often they brake suddenly, speed, or use their phones,” and they may be used to target potential customers based on “10 different risk categories.”
Kathleen Lomax, a mother from New Jersey, contacted Life360 last month to inquire about whether the firm was selling her driving records. Lomax and her twin 18-year-old daughters pay $100 a year for Life360 to track them. “Created with the help of AI,” the automated response informed her that Life360 did share driving behavior data with Arity.
“No one who realizes what they’re doing would consent,” said Lomax, who canceled her subscription.
In an email, a Life360 representative stated that Lomax and her family’s “personally identifiable driving data” was never given to an insurance provider, that consent from a Life360 member is necessary, and that Arity must “take steps with its partners” to identify Life360 as the data source when using it to generate insurance quotes. Arity offers consumers “who choose to opt in with personalized offerings and enhanced services,” according to a statement from GasBuddy. MyRadar did not reply to messages for comments.
According to Stacy Silver, a representative for Arity, when an individual compares auto insurance quotes, the insurer must obtain permission to access the driving information gathered by these applications. However, how specific is that request? The consent to utilize smartphone data occurred when it told customers that “we may collect third party data and reports,” according to a representative for CSAA, a regional insurer for AAA members that uses Arity’s product in several states. For example, that is the typical terminology used by insurers to see a credit report, and many customers could click past it without giving it a close look.
The Fair Credit Reporting Act mandates that businesses that generate consumer reports make them available upon request. However, not every one of the millions of individuals in Arity’s database is eligible to receive their unique driving record; rather, a driver can only receive a report from the company if an insurance company requests it as part of a quote.
Arity’s driving data is not being utilized by all insurers. Speaking through representatives, GEICO and USAA stated that they only gathered information on driving habits from users who downloaded specialized smartphone apps.
According to information gathered by Arity, Allstate stated that it would “soon offer consumers the choice to get a personalized rate based on their driving history.”
A New Metric
The cost of auto insurance is not simple. According to Dale Porfilio of the Insurance Information Institute, a trade group, a variety of factors are taken into consideration when deciding it, including credit history, gender, marital status, age, type of automobile you drive, and place of residence.
“We are trying to predict the future, which, of course, nobody can know with certainty,” Porfilio said. “It’s a core tenet of insurance that the price of the policy should reflect the risk of the policy.”
He stated that telematics was “just one of the most recent variables that has come into play as a tool to align price to risk,” and that the insurance sector has access to a lot of data.
According to Porfilio, insurers have long depended on traffic citation data to estimate risk, but this data is becoming less trustworthy, which is one reason it might be especially interesting at this time. Although driving has become riskier, fewer fines are being issued by the police; this decrease may be attributed to a retreat in law enforcement following the epidemic and massive demonstrations following George Floyd’s death four years prior.
The main attraction of telematics, meanwhile, may lie in its potential to more precisely estimate individual driver risk and provide a more equitable method of rate setting. According to a promotional brochure from Arity, most insurers will charge a 24-year-old guy living in a bustling metropolis more than a 50-year-old lady living in the suburbs. However, what if the man in question drives carefully and doesn’t use his car often, while the woman is a reckless driver who logs lots of miles?
Everyone will eventually have a driving score, according to InsurTech Consulting founder Alan Demers, and good drivers—which most people believe they are—might even like it.
“Don’t judge me based on everyone else,” Demers said. “Judge me based on me.”
Consumer advocates concur with the industry on this point.
“There’s a lot of unfair discrimination in auto insurance,” said DeLong of the Consumer Federation of America. “Auto insurance companies use a lot of socioeconomic factors, like your credit score or your job or your education level, like whether you went to high school or to college or whether you’re married.”
Even if they have spotless driving histories, people with bad credit pay significantly more for auto insurance, according to research by DeLong.
He stated, “Telematics has substantial promise for consumers, and it could be a way to better price auto insurance.” Nevertheless, he was worried that insurance companies would become unduly intrusive or exploit data in ways that resulted in novel types of prejudice.
It is possible to track, for example, when someone drives. A person’s score is negatively impacted by spending a significant amount of time driving at night due to reduced visibility and an increased likelihood of fatigued or drunk drivers. However, as DeLong noted, doing so penalizes those who work the night shift, which is more likely to involve low-wage workers like janitors.
Additionally, DeLong takes issue with customers who are “unknowingly or unwillingly enrolled in these programs.”
Another issue brought up by attorney Chi Chi Wu of the National Consumer Law Center is that consumer reporting companies like Arity are required by law to take steps to guarantee the accuracy of their data.
“They need to have procedures to figure out when the app is collecting data about you as the driver versus the passenger,” she said.
“Arity uses advanced technology to determine if a person is driving or riding as a passenger,” stated Silver, a spokesman for Arity.
Unexpected Monitoring
Texas-based software businessman Rob Leathern received an email from Toyota last year that appeared to be benign: “Good news, Robert! You’ve been identified by Toyota Insurance as a safe driver.”
The email asked him to receive a price for his 2023 Sequoia SUV and offered “big savings” from Progressive. Upon clicking the email’s link, Leathern was sent to a Toyota Insurance website where he was instructed to “get a quote” by entering his ZIP code. The website advised him that by clicking the quotation button, he would provide permission for Progressive to receive his contact details, vehicle identification number, and “certain vehicle driving data” from a business named Connected Analytic Services.
Leathern was curious as to what data was being gathered on him. He contacted Toyota and Connected Analytic Services (which turned out to be an insurance data broker) for a month to request data privacy. In January, Connected Analytic Services sent him a report that included information on the six months before when he had driven his SUV. (According to Toyota spokesperson Corey Proffitt, Connected Analytic Services is a Toyota affiliate that provides partner insurers with anonymous driving and location data.) Customers can control what information is shared about them via the data privacy portal on the Toyota/Lexus app.
There were two sections to the report. The mileage of Leathern’s vehicle, the frequency of activation of the safety features, and the frequency of acceleration and braking at a speed “that insurers view as harder than necessary for defensive driving” were all included in a driving summary.
Additionally, there was a Microsoft Excel file containing time-stamped lists of all of his transgressions along with the latitude and longitude of each location. For example, the speeding tab contained over 200 second-by-second entries for the few drives that Leathern had driven faster than 85 mph.
“I had no idea they’d be collecting this data, let alone using it this way,” he said.
According to Ronald Davis, a Progressive representative, the insurance company only obtained identifiable driving information from a carmaker when clients gave their express permission for it to be used in calculating their premium.
Progressive said that information on how people drove was increasing the accuracy of its pricing in a 2022 presentation to investors. It had a screen that would appear to a prospective client when they requested a quote. With an option to “use my existing driving data,” users might choose to “get a personalized rate based on your driving behavior.”
“When quoting a new policy with Progressive, we specifically inform eligible customers that driving data is available from their vehicle manufacturer and ask them if they would like us to use that data in determining their rate,” Davis said. He mentioned that 70% of those who opted to disclose their activity received a discount.
Driver, Beware
The insurance regulator for Connecticut sent a consumer advisory in April alerting consumers to the possibility that new automobiles could track their driving habits and impact their insurance premiums.
The Connecticut Insurance Department’s George Bradner, an assistant deputy commissioner, stated that his organization was in favor of telematics use and the ability to rate drivers.
However, the fact that many customers are unaware of the data’s use is why his organization sent out the caution. According to him, insurance companies ought to be open and reveal the data they were using to assign ratings to individuals.
Additionally, he stated, “need to be more vigilant about their protection of their privacy.”
What You Can Do
– Verify the privacy settings in smartphone apps and on the dashboard system of your vehicle.
— An excellent place to start is with an app that allows you to receive driving feedback or connect to your vehicle.
— Some programs, including MyRadar and Life360, allow you to choose to “Do not sell my personal information.”
— Waze and Google Maps are two programs you should not be concerned about. Both apps’ owner, Google, stated that it does not give driving information that can be connected to a specific person to outside parties.
Recently, GreatGameIndia reported that California is testing a “road charge” system as gas tax revenues decline, according to CalSTA. Participants voluntarily report mileage, aligning with Biden’s push for electric vehicles.
