Most major U.S. auto insurers have launched or are exploring usage-based insurance (UBI) programs. The most common of these programs, pay-as-you-drive (PAYD), uses actual driving data to determine accurate rates in order for insurers to give customers more control over premiums.
One issue of concern that has been voiced is that, in addition to collection of mileage data, telematic devices monitor and collect all sorts of other driving information, so-called GPS data, including such things as location, speeds, braking patterns etc. The collection and use of this GPS data raises privacy concerns.
The recently released Federal Trade Commission (FTC) report, “Protecting Consumer Privacy in an Era of Rapid Change” pledges that part of a “best practices” framework for the Internet industry concerning how companies should address consumer privacy includes either an industry-created “easy to use and effective” “Do Not Track” option by the end of 2012, or “Do Not Track” legislation from Congress in 2013. “Do Not Track” is the proposed ability by consumers to opt out of tracking procedures.
At this point, it is too early to tell the impact that the renewed call for a “Do Not Track” requirement will have on the telematics industry, but it is worth noting that federal “Do No Track” legislation last year, the Do Not Track Online Act, would have allowed consumers to opt out from having online services collect personal information that can be used for data mining.
That legislation applied to all online activities, including mobile telephone applications and auto-based telematics options. Important to the telematics industry last year was the fact that that legislation permitted providers to collect data, even for those who have previously opted out, in order to provide a service requested by the individual. So, even if it was enacted, the Do Not Track Online Act did not threaten the telematics industry. It should be noted that there was a similar legislative effort last year in California, Senate Bill 761, which failed to pass.
The operational provisions of the federal Do Not Track Online Act and California’s SB 761 were broadly similar by allowing exceptions to data collection and tracking opt-outs in order to provide an expressly requested service. As such, if those statutes had been enacted, it was not believed that they would have had any significant impact on telematics services.
However, with the recent renewed calls by the FTC for “Do Not Track” requirements, the telematics and insurance industries need to protect their business models by watching all federal or state pronouncements on this topic to make sure similar exceptions are present.
For more information or any questions, please contact Tim Moroney 415-743-3713 or tmoroney@bargerwolen.com.
