The automobile experience is undergoing drastic changes as improved safety, performance and entertainment options explode. Remember the jealousy of seeing your friend’s minivan with the DVD player? Now, streaming Netflix and playing video games are entering the market to assuage the boredom of rear-seat passengers. Of course, as auto manufacturers expand the technical capabilities of their products, they also expand their knowledge of their customers.
As cars become “smarter” and collect more data from users, many fear our privacy will be infringed, which could lead to audits and litigation, especially for insurance providers. Competition regulators have an interest in how telematics data helps insurers set personalized premiums by gathering, managing and accessing data. After all, this data is sensitive, and requires privacy rights to be considered.
The data collected by cars is known as “telematics”, and it goes far beyond maintenance information. This data includes specific Global Positioning System (GPS) locations, details on driving habits and information from mobile devices connected to the vehicle.
Given the current nature of data monetization, where an industry has spawned around the collecting and selling of personal data, there is the potential for telematics to be exploited. All of the information collected by cars is fed directly to the manufacturer, so when someone is driving, it is possible to detect their exact location, speed, driving behavior, time of day and more. These devices are always connected and collecting/relaying information.
Tesla aims to collect a minimum amount of personal data necessary for displaying your in-app energy experience, providing services to you, and for improving your energy products. We are also committed to only share your personal data when needed to operate or service your product, or we will ask for your permission. We limit how, and with whom, we share your personal data. Examples of when we may share your information include, payment processing, order fulfillment, product installation, customer service, marketing, financing, service or repair, and other similar services.
Privacy policies vary, with Hyundai specifying that it has a system in place to track driving habits and connect with insurance companies who can offer discounts on insurance based on this data. In some instances, telematics data is collected automatically unless the owner specifically opts out. The opt–out process varies, but the concern among experts is the lack of clarity and consistency in regard to what happens with the data, who is using it, and what it is being used for.
Telematics data is becoming a major tool in assisting in litigation, as data collected on driving habits can help reconstruct accidents and determine fault and exposure. With the help of telematics, detailed timelines can be constructed based on a vehicle’s history and behavior related to specific incidents that resulted in litigation. Telematics can prove driver fatigue, erratic driving, or aggressive driving. This makes data nuanced, and non-intrusive data collection in the best interest of insurers in the event of a claim or request from counsel through the litigation discovery process.
While data collection can be a massive benefit for insurers, there are risks involved. The overall intention of telematics is to improve the safety and experience for automobile owners, but the final application of the data and the lack of understanding on behalf of consumers presents the potential for data-privacy related litigation. The National Association of Insurance Commissioners (NAIC) Big Data and Artificial Intelligence Working Group reviews all current regulatory frameworks necessary to audit insurers’ specific use of telematics data.
There is also the question of how telematics data is stored and managed. Litigation surrounding breaches and intellectual property related to methods of collection and storage is common. Companies must be cognizant about the specific data that is collected and used. Privacy laws present a potential scenario in which any company storing data is accused of negligence or privacy overreach.
No matter how you look at it, telematics data is providing valuable information and is now a significant tool in deciding claim and litigation resolution strategy. Telematics data can be used to aid insurers in pricing decisions and accident reconstruction but can also be used against them if overreach occurs. Therefore businesses, and their legal teams should be informed on the most current laws and regulations related to data collection and usage as to avoid litigation.
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