Policyholders calling foul as automakers share driving info with insurers

Policyholders calling foul as automakers share driving info with insurers | Insurance Business America

Motor & Fleet

Policyholders calling foul as automakers share driving info with insurers

“It felt like a betrayal”

Motor & Fleet

By
Ryan Smith

Some auto policyholders are calling foul after discovering that car manufacturers have shared driving data with their insurance companies without their knowledge.

Many insurers offer voluntary usage-based insurance programs, in which insureds allow data about their driving to be collected via a smart device in return for discounted rates if they drive safely. However, many drivers are reluctant to participate in those programs.

So instead, automotive companies are sending data from internet-connected vehicles directly to insurers, according to a New York Times report.

Kenn Dahl, 65, told the Times that he was shocked when his car insurance jumped by 21% in 2022, despite the fact that he’s never been responsible for an accident. Upon investigation, Dahl found that data analytics firm LexisNexis Risk Solutions had compiled a 258-page report that listed each time he or his wife had driven their leased Chevrolet Bolt over the previous six months.

According to the Times, eight separate insurance companies had requested the LexisNexis report over the previous month.

“It felt like a betrayal,” Dahl told the newspaper. “They’re taking information that I didn’t realize was going to be shared and screwing with our insurance.”

In recent years, several automakers have begun offering features in their car-connected apps that rate people’s driving, the Times reported. However, many drivers don’t realize that if they activate those features, the car companies will share the information with data brokers – who will then send it to insurers.

Both automakers and data brokers say they have the drivers’ permission to collect that information, the Times reported. However, that permission is often given unknowingly, with the consent buried in the fine print of hard-to-understand policies.

Some drivers of GM vehicles told the Times that their driving behavior was tracked – and their insurance rates consequently hiked – even when they didn’t activate the company’s OnStar Smart Driver feature.

The Times reported that even those who enrolled in the Smart Driver program may not realize their data is being sold, as there was no prominent disclosure during the enrollment process that any third party would have access to the information.

“Stealth” data collection

Frank Pasquale, a law professor at Cornell University, told the Times that he was surprised the process wasn’t more transparent.

“Because it’s not within the reasonable expectation of the average consumer, it should certainly be an industry practice to prominently disclose that is happening,” Pasquale said.

“People drive differently,” Ben-Shahar said. “The impact on safety is enormous.”

However, Ben-Shahar told the newspaper that he was troubled by “stealth enrollment” in data-collection programs because it negated the public-safety benefit – drivers aren’t going to modify their behavior if they don’t know it will impact their rates.

Lawmaker scrutiny

The practice has also drawn scrutiny from regulators and lawmakers. In July of last year, California’s Privacy Protection Agency (CPPA) announced that it was probing the privacy practices of automakers.

“Modern vehicles are effectively connected computers on wheels,” CPPA executive director Ashkan Soltani told Reuters at the time. “They’re able to collect a wealth of information via built-in apps, sensors, and cameras, which can monitor people goth inside and near the vehicle.”

Last month, Sen. Edward Markey (D-Mass.) asked the Federal Trade Commission to investigate automakers’ data-collection practices.

“This ambiguity and evasiveness calls out for the investigatory powers of the FTC,” Markey wrote. “Given the serious risks to consumer privacy, I urge the Commission to use the full force of its authorities to investigate the automakers’ privacy practices and take all necessary enforcement actions to ensure that consumer privacy is protected. The auto industry cannot become yet another domain that tracks and targets consumers.”

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