A recent exposé by The New York Times has revealed a clandestine influence on insurance rates that eludes drivers’ awareness and explicit consent. The story unfolds as car insurance companies, armed with telematics and driving behaviour data, wield their decision-making power to impact premiums while usurping conventional ideas of consent and privacy within the automotive industry.
The well-established practice of insurance companies offering black boxes or telematics devices to scrutinise driving behaviour has become common knowledge. Telematics car insurance entails installing a dongle or using a smartphone app to gather data on driving habits.
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The underlying assumption of telematics insurance is that vigilant driver monitoring fosters safer behaviour on roads, theoretically rewarding safe driving practices through reduced premiums. However, the challenge lies in the clash between telematic data collection and the entirely reasonable desire of drivers for privacy.
The NYT report exposes an instance where an automaker circumvented the necessity for explicit driver consent, granting insurance companies unrestricted access to extensive driving data without the knowledge of vehicle owners.
Telematics car insurance
An illustration of this involves Kenn Dahl’s experience. The 65-year-old owner of a software company near Seattle found himself startled in 2022 when his car insurance costs surged by a staggering 21%.
LexisNexis, a New York-based global data broker specialising in auto insurance, played a pivotal role in determining Dahl’s insurance rates.
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By GlobalDataUpon request, Dahl received a meticulous 258-page “consumer disclosure report” under the US Fair Credit Reporting Act.
General Motors (GM), the manufacturer of Dahl’s Chevy Bolt, provided this report, encompassing over 130 pages detailing every trip taken in the vehicle over the preceding six months. Dates, times, distances and driving behaviours were meticulously recorded, culminating in a comprehensive profile. LexisNexis utilized this data to craft a risk score for insurers tailoring insurance coverage.
Dahl expressed his dismay in the NYT article, stating, “It felt like a betrayal. They’re taking information that I didn’t realise was going to be shared and messing with our insurance.”
In recent years, insurance companies have attempted to entice individuals with incentives to install black boxes for monitoring driving habits. These apps track various metrics, such as driving duration, cornering speed, braking intensity, and adherence to speed limits. Despite these offers, there has been a consistent reluctance among drivers to engage in such programmes, as underscored in a patent application by Ford Motor. This patent document signals a shift, indicating that car companies are now directly extracting information from internet-connected vehicles to provide data for the insurance industry.
While some instances involve driver awareness and consent, the investigation brings to light more covert practices. Modern cars, endowed with internet connectivity, offer access to various services.
Automakers like GM, Honda, Kia, and Hyundai present optional features in connected-car apps that evaluate drivers’ habits. Activating these features unwittingly allows car companies to share driving data with data brokers like LexisNexis.
Automakers and data brokers argue they have drivers’ permission, but the intricate fine print and complex privacy policies render these partnerships nearly invisible to drivers.
The tracking of drivers, even when features like GM’s OnStar Smart Driver remain inactive, raises concerns about increased insurance rates. GM’s response underscores the optional nature of OnStar Smart Driver, with customers having the ability to unenroll at any time. However, concerns persist regarding potential undisclosed enrolment at dealerships, where salespeople may receive bonuses for enrolling customers in OnStar services.
This revelation spotlights the challenges faced by drivers in comprehending the intricacies of privacy policies associated with connected car features. As the automotive industry becomes increasingly entwined with data-driven practices, there is a pressing need for heightened transparency in data-sharing agreements and enhanced privacy protections for drivers.
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