With corporate media finally aware of the perils of connected vehicles, we’ve seen a rash of articles exploring how insurance rates have spiked due to automakers sharing user data. But they’re not the only ones: Phone apps are also a major vector for obtaining and shifting profitable driving data without their owners even being aware it’s happening. It’s another contributing factor to why the average insurance rate has risen between 25 and 40 percent in 2024.
The insurance industry is obsessive about analyzing risk. The entire business model is predicated upon this, minus the fact that it became a legal requirement to drive in most states by 1970. But we’ll gloss over the government’s role for the purposes of this article and definitely won’t be talking about how making insurance compulsory created one of the wealthiest business sectors in America.
More points of data means better analysis, so it was a given that insurance firms would try to buy up whatever data companies happen to have at their disposal as connected vehicles and smartphones became the norm. However, buying data is a losing proposition if you cannot turn it into profit. Fortunately for insurance groups, having more information about a driver gives you more opportunities to find fault and raise their premiums.
According to an investigation by The New York Times, subscription-based apps like Life360, MyRadar, and Gas Buddy have been sharing user data with a mobility data and analytics company known as Arity. While the company describes itself using all flowery corporate jargon we’ve come to expect, Arity is basically a subsidiary of the Allstate insurance company that transforms user data into a “driving score.”
While the score is supposed to determine how safe of a driver you are, critics are accusing the company of effectively using the service to raise the rates of all drivers. Relevant metrics include how often you interact with your phone, how frequently you speed, how many times you have to stop quickly, how often you drive at night, and even the average distance you drive. Location data has also been rumored to play a role. For example, vehicles that frequently traverse high-crime areas may be subjected to higher rates.
With automakers engaging in rampant data harvesting (at a level that sometimes exceeds what your phone can do by itself) one could assume that phones-based apps would likewise be cooperating with insurance firms. But that doesn’t make any of this better, whether we’re talking about companies spying on their own customers or firms leveraging that spying into charging them more money. That said, this does explain why we’ve seen a rash of “safe driving programs” over the last 15 years.
But the concept was floated as a way to lower individual rates by remotely tracking good driving behaviors. Instead, we’ve ended up with a situation where just about everyone’s rates have gone up — even if they never bothered enrolling into those data-monitoring programs.
Worse yet, many people who did sign up were not aware of the kind of privacy they were giving away. In this respect, these app-based systems are really no different than the shady data dealings automakers are being faulted with.
From The New York Times:
The smartphone apps collecting driver data may not be obvious at first glance. One, Life360, is used by parents to keep track of their children. MyRadar offers weather forecasts. GasBuddy helps people save on fuel costs.
All of these apps also have opt-in driving analysis features that rely on sensor and motion data from the phone. You can turn on these features to get notifications if a family member crashes or suggestions for a more fuel-efficient route to work. Those features, though, are provided by an analytics company, Arity, which was founded by Allstate in 2016 and pays for access to the data. What is not made clear when people sign up for the features is that Arity also analyzes how risky their driving is for insurance purposes.
On GasBuddy, for instance, users can turn on a feature that rates the fuel efficiency of their drives, a feature “powered by Arity.” Brandon Logsdon, a spokesman for the company, said users “agree to Arity’s privacy statement before they opt in to the Drives function.”
But this agreement is in small gray font under a big red button labeled “Join Drives.” The tiny disclosure says simply that by clicking “Join Drives” you will share “certain information” with Arity and agree to Arity’s privacy statement, which is hyperlinked. The language does not explain what Arity is or does.
The company sells access to the driving scores of tens of millions of people. Auto insurance companies can “request a person’s individual driving score, which is delivered instantly,” according to Allstate’s website.
Most of these services are subscription based, so many drivers are effectively paying for services that are ultimately resulting in higher insurance costs anyway. The piece from NYT gives numerous examples where it interviewed people claiming to have no idea how things worked until they got fed up with their rates going up and decided to look into the matter themselves.
Arity has responded by saying drivers are required to give consent before driving data is collected. But with so much of the digital world being buried behind user agreements literally nobody bothers or has time to read, most opt in without realizing what they’ve signed up for. From there, it’s basically open season. Third parties can do whatever they want with the information and you probably have no idea where that point of access even stemmed from. In many cases, users likewise have to jump through loads of hoops to see what their driving score happens to be.
It’s not like insurance rates are all that transparent to begin with. They’re calculated through a medley of a person’s age, marital status, vehicle type, gender, credit history, crash history, location, and other factors. Now we’re seeing insurance groups toss in a data score that’s often taken covertly and uses some rather arbitrary metrics. In many cases the amount of data recorded is being done by the second, with massive spreadsheets tracking your every move and exactly how quickly you made it. However, it lacks any additional context.
Someone may need to brake hard through no fault of their own and it hardly seems fair to penalize someone for driving at night if that’s when they’re required to work. Granted, these things can be indicative of someone who has to traverse roads that are slightly more treacherous. But it doesn’t necessarily make them less safe as a driver.
The other side of this is the fact that it’s a grotesque invasion of one’s privacy that’s making it harder just to own a car. The insurance firms already had a staggering amount of information about their customers and seemed to be making a tidy profit. But running with data mining has exacerbated this and resulted in further increasing the cost of owning a vehicle. While some states are fortunate enough to still see annual insurance rates $500 (minimum coverage) and $1,700 (full coverage) annually, others are averaging $1,300 (min) and $3,600 (full).
And it all became significantly more expensive this year.
Sadly, The Times seemed to view this as all inevitable and spoke to industry experts that assumed all people would someday have a driving score, speculating that it would be akin to the credit score already used by financial institutions and even insurance agencies. Telematics-based insurance is alleged to create a fairer system by judging each driver independently from the rest.
But that doesn’t seem correct, as companies already lump people together by generalized traits to decide insurance rates. We’ve also seen average rates increase rather dramatically since the industry has started leveraging telematic data. The very programs promised to help drivers lower their rates clearly achieved the exact opposite result. If that’s the case now, why would anyone be foolish enough to believe it won’t be the case later?
[Image: Alex Photo Stock/Shutterstock.com]
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