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May 03, 2013

UK Agency Publishes Guidance on Insurance Telematics Data Privacy

By Tracey E. Schelmetic, TMCnet Contributor

Automobile telematics solutions are becoming more common with insurance companies. These are generally the small devices that drivers can place in their cars to track how safely they drive. The units measure speed, sudden stops, fast cornering and other metrics that can indicate how big an insurance risk a driver is. If the results are good, drivers with the units can earn themselves lower car insurance rates for proving themselves to be “safe drivers.”

The units yield a lot of data that could be valuable to marketers and researchers. For this reason, auto insurance companies using telematics may be tempted to share or sell the information to others. In the UK, however, the Association of British Insurers (ABI) is warning auto insurers of their privacy obligations with such information.

The ABI recently published new guidance that advises insurance companies to obtain “opt-in” consent from drivers before they share any telematics data with third parties. Specifically, this means getting auto insurance policy holders’ permission before sharing or selling information to firms that are not themselves "directly involved in managing or delivering a policy, handling a claim, setting premiums, detecting and preventing fraud, responding to customer queries or delivering any service included as part of the policy,” according to Pinsent Mason’s Out-Law Web site. This guidance is in accordance with UK data privacy laws.

UK auto insurance policy holders must be provided with "clear and comprehensive information" about how their personal telematics data will be collected and used, who has rights of access to the information and what their own rights are with respect to the data, said the ABI in its report. The UK’s Financial Services Authority (FSA) has reportedly joined the ABI in an effort to draw up a good practice guide for telematics, according to a February article from Datamonitor.

In the U.S., there are no regulations on telematics data privacy yet, but that doesn’t mean there haven’t been concerns. Some auto insurance customers and data privacy advocates have worried about the privacy implications of telematics data. Progressive, one of the first companies to launch a safe driver program using an in-car device, no longer monitors cars’ location in order to ease drivers’ concerns. The company’s telematics devices monitor for only six months to establish a snapshot of driving frequency and style, after which the discount is permanent, according to The Economist.

Edited by Blaise McNamee
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