Driving Dystopia: More Companies Caught Covertly Sharing Driving Data, Raising Insurance Rates

With corporate media finally recognizing the dangers of connected vehicles, a surge of articles has emerged revealing how insurance rates have spiked due to automakers sharing user data. However, automakers aren’t the only culprits: phone apps also play a significant role in covertly obtaining and distributing driving data without users’ knowledge. This contributes to the average insurance rate increase of 25 to 40 percent in 2024.

The insurance industry thrives on risk analysis, a business model strengthened when driving insurance became mandatory in most states by 1970. While we’ll sidestep the government’s involvement and the resulting wealth of the insurance sector, it’s clear that more data points enable better risk assessment. Consequently, insurance firms are eager to purchase data from connected vehicles and smartphones. This data acquisition becomes profitable as it allows insurers to identify more faults and raise premiums.

An investigation by The New York Times uncovered that subscription-based apps like Life360, MyRadar, and Gas Buddy have been sharing user data with a mobility data and analytics company called Arity. Though Arity describes itself with typical corporate jargon, it is essentially a subsidiary of the Allstate insurance company that converts user data into a “driving score.”

While the score ostensibly measures driving safety, critics argue that it’s primarily used to justify raising rates for all drivers. Metrics include phone interaction frequency, speeding incidents, abrupt stops, night driving, and average driving distance. Location data also reportedly influences rates, with higher charges for vehicles frequently driven through high-crime areas.

Given the extensive data harvesting by automakers, it’s unsurprising that phone-based apps would also cooperate with insurance firms. However, this doesn’t justify companies spying on customers or exploiting this data to increase charges. This trend explains the proliferation of “safe driving programs” over the past 15 years, initially marketed as a way to lower rates by monitoring good driving behaviors. Instead, rates have risen across the board, even for those who didn’t enroll in these programs.

Moreover, many participants in these programs were unaware of the extent of their privacy concessions. In this regard, app-based systems mirror the dubious data practices of automakers, ultimately leading to higher costs and compromised privacy for consumers.