Information regarding drivers’ behaviors is being extracted from specific smartphone applications — sometimes without the driver’s awareness or permission — and sent to auto insurance companies to determine rates. As per a recent article in The New York Times, various popular apps like Life360, MyRadar, and Gas Buddy are sharing user data with Arity, a company owned by Allstate, by employing telematics technology.
These apps utilize telematics to transmit sensor and motion data from smartphones, which is then analyzed by Arity to create a “driving score” that evaluates driving behavior such as distracted driving, speeding, and sudden braking. While the data collectors claim that users consent to sharing this information and can opt-out if desired, many individuals are unaware of being monitored in this manner.
Not all insurers utilize Arity’s driving data, with companies like GEICO and USAA tracking driving behavior only through specific smartphone apps installed by the users.
On the flip side, using driving data to determine insurance rates could potentially lead to more accurate risk assessment for individual drivers and a fairer pricing structure. This approach aims to address the existing disparities in auto insurance pricing based on socioeconomic factors like credit scores, occupation, and education level.
According to Micheal DeLong from the Consumer Federation of America, there is a significant amount of unfair discrimination in auto insurance pricing, with individuals having poor credit scores often paying higher premiums despite maintaining clean driving records. Telematics technology holds promise in offering a more equitable method of pricing auto insurance policies.
FAQ
Q: Can users control the sharing of their driving data with insurance companies?
A: Yes, users have the option to opt-out of sharing their driving data with insurance companies if they choose to do so.
Q: Which apps are known to share user data with insurance companies?
A: Popular apps like Life360, MyRadar, and Gas Buddy have been reported to provide user data to companies like Arity, which is owned by Allstate.
Conclusion
While the use of driving data to set auto insurance rates may offer benefits in terms of risk assessment and pricing fairness, it raises concerns about user privacy and consent. Consumers should be informed about how their data is being collected and shared, and have the option to control its dissemination to insurance companies.
