Researchers Question Privacy of Usage-Based Auto Insurance
By:Don Jergler (Insurance Journal) October 2013
A study by a handful of university professors in Colorado claims user-based insurance tracking programs installed in millions of vehicles can collect data that shows where drivers are going, unbeknownst to most users of the technology.
Professors from the University of Denver took 30 unique automobile trips around the Denver area. Some trips started at an office and ended at home, some were from a home to the grocery store, other trips were to drop off kids at school and others were social visits.
Using a device similar to what many insurance carriers offer, the professors tracked the driver’s speed and distance, then compiled the numbers and used basic maps to come up with what they called a “simple algorithm” that told them with a high degree of accuracy where the driver was going.
The authors of the study highlighted the fact that the device they used in their tests did not employ global positioning coordinates. Many devices on the market do not incorporate GPS as a way to alleviate privacy concerns that come with gathering information that gives a persons’ fixed position on the planet.
It turns out they didn’t need GPS to pinpoint a driver’s destination.
A study claims telematics data can show where drivers are going, unbeknownst to most users of the technology.
As a result of the study the authors called for “more transparency” from carriers offering UBI, or telematics, products, which can earn drivers a discount if the data collected by the devices bears out their safe driving practices.
“Given the privacy issues surrounding the geographic tracking of individuals, many solutions explicitly claim that the customer’s GPS coordinates are not recorded,” the authors state in their study. “Although revealing driving habits can give us access to a number of innovative products, we believe that the disclosure of this data only offers a false sense of privacy. Using speed and time data from real world driving trips, we show that the destinations of trips may also be determined without having to record GPS coordinates. Based on this, we argue that customer privacy expectations in non-tracking telematics applications need to be reset, and new policies need to be implemented to inform customers of possible risks.”
One of the authors of the study, Rinku Dewri, an assistant professor in the Department of Computer Science, explained that what the study shows is there is less privacy when using a UBI than insurers are claiming.
“Mostly we are asking for more transparency from the ones who are offering these programs,” Dewri said, adding that UBI users are given a sense when they sign up for the programs that the data can’t be used to track them.
Dewri, who is also involved in the Colorado Research Institute for Security and Privacy, also raised questions over how such information would be used, whether it will be shared with others, and the security of that information, since ensuring it can’t be taken from carriers and used by criminals or others is now a concern.
Counter
“The study takes a very high intensity approach to tracking a single vehicle,” argued Timothy B. Nee, president of Dorman Consulting Associates, a part of TEACH Insurance LLC, which offers training and consulting to the property/casualty industry. “It’s hard to see what person or group – outside a government – would have similar resources available to track a single vehicle. This calls into question whether this privacy concern is more than a theoretical one.”
Nee also scoffed at the notion that people who sign up for UBI expect a high level of privacy.
“Most Americans realize that there are two groups of people who are monitored regularly as they move about the country,” Nee said. “The first group is monitored involuntarily by a court order requiring that tracking device be attached to their ankle. The second group includes everyone else, almost all of whom volunteer each day to be monitored by placing a mobile phone in a purse or pocket.”
Nee noted that software giants Google and Apple offer highly popular smartphone devices that track users more than most realize, and recent events have put in the minds of U.S. citizens that their government and its National Security Agency may be doing more electronic surveying that was previously believed.
“We have since learned from Edward Snowden that the NSA can and does monitor Americans regularly, sometimes directly and sometimes through meta data,” Nee said. “Again, most of us shrugged, agreed it was an outrage, and have moved on, essentially unfazed.”
Just what is being done with the UBI information varies by carrier, but largely it is sifted through for the information carriers need to make good underwriting decisions – and oftentimes the information beyond that never even makes it to the carrier, according Nee.
“Some devices process a portion of the data on the actual device, sifting out data that is considered imperfect or non-essential,” Nee said. “This saves carrier money on data transmission, just as it would on a customer’s mobile phone plan. Other devices transmit all the data to the carrier, which then must parse through it.”
Concerns
Robin Harbage, director global head of sales and product delivery of usage-based insurance for professional services company Towers Watson, agreed with the authors’ call for transparency.
“You need to be transparent about what you’re collecting,” Harbage said. “I think it is absolutely critical for insurers to be transparent with their client.”
Towers Watson said it prescribes data collection standards that outline steps to good transparency to the 30-plus carrier clients it deals with.
The acceptance of UBI is a few steps short of unanimous, while privacy concerns don’t rank too high among those polled, according to a survey from the company in September.
The Towers Watson survey shows nearly eight-in-10 respondents are willing to either buy a UBI policy or willing to accept the concept. The survey was conducted in seven countries, including the U.S. and Canada, with more than 1,000 participants from each country.
When asked for their feelings on UBI if insurers were to guarantee drivers’ premiums would not rise, the percentage of acceptance rose to 89 percent, according to the survey.
“They clearly see value here,” Harbage said.
Drivers taking the survey showed the most interest in vehicle theft tracking (83 percent), automated emergency response (82 percent) and vehicle wellness reports (79 percent).
“Privacy wasn’t even near the No. 1 issue,” Harbage said.
The survey showed 41 percent expressed fears that insurers would share their data, while 42 percent were concerned insurers will monitor or track their driving destinations. Forty-nine percent were worried their premiums would increase.
