By Robert Gray
Usage-based insurance (UBI) policies are slowly gaining traction with Canadian drivers, but experts say uptake is stuck in first gear. They say that’s because greater consumer awareness and education is needed to dispel concerns and myths about privacy risks due to sharing data on driving habits.
“Privacy is a very important issue today because it’s being eroded every day by technology,” explains Gil Zvulony, a Toronto-based privacy lawyer who regularly advises businesses on privacy and technology issues.
Zvulony adds, “The technology today makes it very easy to track anybody quite intrusively so the public is really scared about this. As it relates to telematics, you’re going to have big brother considerations, people are scared of that. You have to deal with people like that on a public relations level and explain to them why it’s no different than tracking them on a cell phone.”
Many of the concerns center on the way data is collected, stored, and shared with insurance companies. In pay-as-you-drive plans, consumers agree to install a black box, smaller than a hockey puck, in their car. It has the ability to remotely track where and when the car is driven as well as sudden braking and abrupt acceleration. The data is used to create a profile and track record from which drivers’ premiums are derived.
Privacy concerns off track?
A recent KANETIX survey unveiled at the Insurance Telematics Canada conference found three-fourths of respondents were worried that personal information would be stolen. 73% said they were concerned personal data would be used against them to deny a claim or cancel a policy. Two-thirds of Canadians canvassed were concerned the device wouldn’t accurately capture their driving habits so they would be incorrectly assessed.
The privacy theft concern is widespread among consumers using most digital devices, while officials say the latter two issues are fallacies. “Under FSCO (the Financial Services Commission of Ontario) regulations you can’t use this data to discriminate against bad drivers or to charge them more,” explains Fred Carter, Acting Director of Policy in the Office of the Information & Privacy Commissioner of Ontario. But Carter concedes the handful of first to market insurance companies are “cherry-picking” in these early days to get the better drivers by offering them discounts to sign up for UBI policies.
Desjardins is a trailblazing firm in offering pay-as-you-drive insurance and company officials say they have deployed great resources to teach customers and the public what UBI is as well as what the technology is and does.
Desjardins and its rivals have a long ways to go to achieve awareness of the product. The KANETIX survey found not even one in five Canadians are aware that UBI exists, much less is an option for car insurance.
Paradigm by the dashboard light
UBI drivers can see what data is being collected and shared by logging onto secure dashboards. Companies also want to efficiently and effectively track employees and fleet vehicles or rental cars. These can easily be done via UBI technology. And some observers say it could modify behaviour and make people drive more safely to achieve lower premiums or discounts since consumers know what is being tracked.
“People should be aware of the potential legal uses of such information. It could be used by law enforcement agencies in some situations or subpoenaed in some cases. That’s also possible in cases of people’s emails, Facebook postings, and credit cards. It happens a lot more often with emails than it would with this (UBI) data.”
Data Ownership & Sharing
Like other digital data, there are plenty of questions swirling about ownership. Who owns which data and has rights to it? And the answer may not be consistent across Canada--each province has different UBI regulations and officials say the nation has a different view on data than its next door neighbor to the south.
“In the US, it’s all about data ownership. We don’t really use that language with respect to privacy in Canada,” explains Carter, the Ontario privacy official, adding, “It’s not a question of data being exclusive, it’s co-sharing it. Insurance could use it for one purpose, the consent a person has granted for that data.”
Still Carter says connected cars and vastly improved monitoring devices are opening up some gray areas in data usage. “From a privacy point of view we’re interested in how data is collected, disclosed, and used. How it’s used by insurance companies is pretty straightforward, pretty well regulated. But in vast other areas, it’s not.
“FSCO regulations are clear about what can be captured and how long it can be kept, but this is the thin edge of the wedge. Once monitoring devices are in your car, there’s going to be a strong temptation to offer other unrelated systems. If you’re in an accident, would you like that information to be called out? Or have location finding if your car is stolen? (or) put limits where your teenage child goes or get special reports? Those aren’t insurance services and they fall outside of the scope of FSCO.”
Privacy Driving Concerns May Pass
Another hurdle for the industry is determining who the driver is. Currently, all drivers on the policy are taken into consideration when an insurer decides on a rate. That’s because current technology cannot discern who is behind the wheel. So a conservative middle-aged driver with a clean driving record will be considered along with their neophyte teenage children. This loophole also poses privacy issues when loaning a car to a friend or family member not on the policy.
“I may get my car insured and consent to the use of a telematics device, but I may lend my car to a friend who has no idea about the sensor,” reasons privacy attorney Zvulony. “In addition to clear disclosure to the client, there should be some mechanism to let drivers know the device is in the car.
“Maybe down the road where it’s the norm, any driver would assume there’s a device but today we can’t make that assumption. To protect the privacy of these drivers, it could be something as simple as a sticker on the dashboard, it would inform drivers and maybe deter theft, saying ‘It’s easy to track where this vehicle is’. That’s going to be a definite bonus.”
As for now, the education and marketing campaigns continue apace working both to introduce consumers to UBI and to allay privacy fears over current data collection as well as future uses. Zvulony is optimistic that it will just be a matter of time before drivers realize they already have a more invasive device on board their vehicles: “As the technology becomes more established, people’s privacy concerns will melt away…these telematics devices don’t compare to smartphones with a mic, GPS, camera; the amount of privacy violations that could be done with a cellphone is incredible. Telematics is pretty innocuous and I don’t think there will be much of an uphill battle to accept it.”
For more information on the opportunities for insurers and the telematics community in the Canadian market, take a look at Insurance Telematics Canada Conference and Exhibition.
For the latest telematics trends, check out Telematics Brazil & LATAM 2014 on September 24-25, Sao Paulo, Brazil, Telematics West Coast 2014 on October 30-31 in San Diego, USA, Telematics Munich 2014 on November 10-11 in Munich, Germany, Connected Fleets USA on November 20-21 in Atlanta, USA and Consumer Telematics Show 2015, January 5 in Las Vegas.
03 Sep 2014 - 04 Sep 2014, Radisson Aqua Blu, Chicago
Pricing Becomes a Commodity: Insurers Enhance the Consumer UBI Proposition by Integrating Complimentary Services for Product Differentiation