Big Brother - Are Americans Ready for the Growth of Usage (Telematics) Based Insurance?

by Hinshaw & Culbertson LLP
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Fox News.com (“Fox”) reported on April 24, 2012, Are drivers ready for Big Brother car insurance plans? that a new study points to the fact that good drivers seem poised to give up privacy rights in order to achieve savings in their auto insurance premiums through usage based insurance programs such as pay-as-you-drive (PAYD) models.

Specifically, the Fox article noted that a UK-based insurance aggregator, GoCompare.com, conducted a survey that found 92 percent of drivers surveyed believe that insurance premium should be based on how they drive and that 97 percent indicated that good drivers should get better insurance rates.

While PAYD programs now exist in many states from many carriers, as reported by Fox, Americans once thought to be protective of their privacy may now be willing to give up some privacy in order to obtain rewards such as cheaper insurance premiums. 

While no reasons or support were provided in the Fox article to suggest that Americans are in fact willing to give up some privacy, any loosening of views in this area may result from the fact that consumers in today’s Google or Facebook America may not have the same expectations of privacy when it comes to giving private companies (as opposed to government actors) access to their private information, including driving data.

Insurance regulators across the country are surely going to adopt rules on how and what types of information may be collected – California has already done so (Title 10 California Code of Regulations section 2632.5) – in connection with such programs. We will keep you posted on any state developments in this regard.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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