Connected cars: The data harvest driving insurance premiums higher
A BBC Future investigation reveals that car manufacturers, insurers, and data brokers are leveraging extensive telematics to profile drivers, with some consumers facing significant premium hikes as connected vehicles become the norm.
Modern vehicles have evolved into sophisticated data-collecting computers, harvesting intimate details such as precise location, biometric data, and driving behaviour. This information is frequently shared with insurance companies and data brokers, raising concerns that it may lead to higher premiums for consumers. A new US federal mandate requiring advanced impaired-driving prevention technology is expected to further expand data collection without specific privacy safeguards. Experts warn that current regulations are insufficient to protect consumer privacy, with a 2023 analysis by Mozilla describing cars as "the worst product category we have ever reviewed for privacy" due to widespread failures in privacy and security standards.
The scope of data collection is extensive, encompassing everything from facial expressions and weight to the identities of passengers and radio preferences. A 2023 analysis by Mozilla examined the privacy policies of 25 car brands and found that every one failed to meet Mozilla’s privacy and security standards. Kia’s privacy policy lists the collection of details regarding "sex life" and general health, though a Kia spokesperson clarified this reflects California’s definition of "sensitive data" and stated the company has never actually collected such data. General Motors (GM) was barred by the US Federal Trade Commission from selling vehicle data for five years following allegations of selling location data without consent, though the company may resume the practice with express consent.
The financial implications for drivers are already visible. A driver reported a 21% increase in insurance costs after LexisNexis, a data broker, provided 130 pages of trip data to an insurance agent. US Senators have accused Honda and Hyundai of similar data-selling practices, although these are not the only public examples. The data is often used to create detailed psychological and behavioural profiles, which can influence insurance pricing, marketing, and even hiring decisions, with little oversight on who buys the information or how it is used.
Regulatory frameworks remain fragmented and often inadequate. While Europe offers some protections allowing consumers to access or delete their data, the US lacks a comprehensive national privacy law. A 2023 analysis by the state of Maryland found that while 31% of drivers saw insurance rates drop due to telematics, 24% saw prices rise and 45% saw no change. The Consumer Federation of America notes that insurers are using this vast amount of consumer data to slice and dice customers into various categories, often charging higher premiums or denying coverage based on inferred behaviours.
The situation is set to intensify with a US federal mandate requiring advanced impaired-driving prevention technology, which will rely on infrared biometric cameras and other systems to scan driver behaviour. This mandate expands data collection without specific privacy safeguards, potentially handing the auto industry a trove of medical information. McKinsey predicted that the number of internet-connected cars on the road would rise from 50% in 2021 to 95% by 2030, underscoring the urgency for robust privacy protections as the industry continues to grow its data empires.
