While telematics look set to become the next big thing in car insurance and a feature of many a new vehicle moving forward due to their incredible benefits to the consumer and insurer, one of the biggest hurdles it’s going to need to cross is data privacy. Often times when data is collected on a customer, regardless of industry, it’s anonymous, as the data is used in a meta sense for figuring out customer trends. However with telematics it’s very specific, including location data and driving habits, meaning insurers know where you go, how often and how you get there. With that in mind, one group is calling for more transparency in the industry of how that data is handled and increased safeguards to protect customer privacy.
The organisation behind the call is OVL Group, the parent company of several car hire and vehicle leasing firms in the UK. It argues that the insurance industry should be more open about what data is collected on users, where that data is stored, for how long and if it is being shared or sold with/to any other companies.
“Everyone gets the fact that insurance companies need to establish what happened at the scene of an accident to apportion blame against claim, and the need of fleet managers to be able to identify more readily the boy racers in need of some remedial driver training to keep the company’s premiums low,” said OVL managing director Martin Wedge.
“But this is as grey an area as the grey fleet for companies, and data management in terms of who has access to that information. The insurance industry has not covered itself in glory in recent years by the routine selling on of information to accident management companies, the subject on an on-going Government enquiry,” he said (via Fleetworld).
Considering the recent attention governments and companies of the world have received in terms of privacy invasion and the rights of individuals and even talks of a human rights investigation from the European Union, OVL may have a point. Privacy watchdogs and lobby groups will keeping an eye on the insurance industry and will be looking to pounce on any instances of unscrupulous use of customer information. Should that happen, governments could weigh in and cause a lot of problems for the burgeoning telematics industry.
“Indeed, “Big Brother in the back seat” could end up driving bad behaviour rather than good driving practice, companies could find themselves at the wrong end of hefty fines for breaches of the Data Protection Act,” Wedge continued. “This would have a brand reputational impact at a time when individuals are trying to claw back personal information about themselves that has leaked into the ether through social media.”
Ultimately Wedge warned that if insurers used their new found powers to drive up premiums through selling on accident information and inflating claims when they know they’re in the legal right, it could lead to a collapse of the industry rather than growth, something that telematics has the potential to trigger.
It seems like in the interest of consumers and the industry as a whole it would be better if insurers offered voluntary regulation of data gathering, rather than waiting to be forced into it by governments. But perhaps not? What do you guys think?
