You’re in Big Brother’s Hands with Allstate

The company that has been telling us we are “in good hands” for decades wants to set your car insurance rate by tracking your driving. The Allstate Corporation is at the vanguard of a relatively recent technology that will allow them to get their grubby little fingers into where, when, and how you drive.

As any parent who has ever used a tracking app to monitor their newly licensed 16-year-old knows, this information is a breeze to find. LIFE 360 is one such application. When installed on your smartphone, you can determine the total miles your teenager logged on his car as well as his top speed, where he went, and how long he spent at each location.

Not So Far Down the Road

Until now, car insurance premiums have been based on a driver’s credit history and actuarial tables. But consumer advocacy groups have cried foul, claiming this system unfairly targets those in lower-income brackets. To get around this, insurance companies have been lobbying state regulators to permit a rate-setting system using telematics.

Telematic monitoring devices have already been integrated into millions of vehicles. Most consumers aren’t even aware the system is embedded into their cars and trucks. In the name of fair play and safety, insurance carriers now want to access that information to set your premiums.

Feeling violated yet?

Hit the Road, Jack

Naturally, some feel this is a gross violation of privacy, but others see it as a system whose time has come. Currently, as mentioned earlier, insurers use credit history and actuarial tables to choose what a driver should pay to insure his or her vehicle. Actuaries place the driver in a demographic group. So, let’s say your child is an 18-year-old male driver with a clean driving record. He’s still likely to end up in one of the highest premium groups because so many males under the age of 20 have accidents. This is a selling point for using telematics because the insurer can drill down into a specific vehicle and, they say, set a more accurate rate based on an individual’s driving behavior.

The information gathered by insurance companies like Allstate digs into the minutiae of the way you drive. Do you slam on the brakes? Not good. But what if you hit the brake because a child ran in front of your car? You don’t get brownie points for such a safety maneuver.

Under the current program known as Allstate Drivewise, two million people have signed up to participate, but that’s a drop in the bucket when one considers there are more than 210 million vehicle policyholders in the U.S. To provide incentive, those who do choose Drivewise get a 10% discount on their premium. Other insurance companies, such as State Farm, operate similar “incentive” programs.

Still, many questions and concerns abound: What if you share a car with your husband and he’s got a lead foot, while you drive as if you were carting around Miss Daisy? Then there’s the issue of who owns the telematic statistical information – you or the insurance company. If you own it, you shouldn’t have to share it with them, but if they possess it, all bets are off.

Consumers are also apprehensive about location detection. If you park in an area deemed less safe, your insurance carrier may penalize you – not to mention that they will know exactly where you go all the time. What hasn’t been brought up yet, though it likely will be, is that those who live in affluent areas are apt to get a better rate than those parking their vehicle in marginal neighborhoods.

Allstate is aggressively pursuing the telematics rate-setting system. They have 44 patents recorded in conjunction with telematics and have applied for another 16. These include such things as “route risk mitigation,” where they assign a driver’s risk based on roads they deem less safe than others.

Public reaction thus far is mixed. On one hand, there are those who prefer not to be lumped into an actuarial table and like having their insurance premiums based on their driving record. On the other, there are liberty-minded individuals who object to the intrusive hand of Big Brother reaching into their ride and keeping tabs on their whereabouts. But like it or not, the telematic train has already left the station and is headed for an insurance company near you. Whether we will be in good hands or not is ambiguous and unsettling for those who value what little privacy they have left.

~ Read more from Leesa K. Donner.