Big Brother in Your Car
Your chipper TV friend Flo, otherwise known as Progressive Insurance's ubiquitous shill, wants you to be excited — very excited. As you've probably learned from her effervescent commercials, she and her Big Brothers in the insurance biz want you to see their new tracking devices for your car not as a privacy-destroying step to justify raising your government-mandated car insurance premiums. Instead, they want you to see the gizmos, which record your vehicle's every move, as a great innovation to get you premium discounts for safe driving.
Yet, despite the happy TV ads, questions are nonetheless swirling around this so-called "telematics-based insurance" — questions that Flo doesn't want you to ask, because the tracking system is so frighteningly invasive and arbitrary.
To appreciate that disturbing reality, consider how the system operates. Quoting a Progressive manager, FoxNews.com reports that the tracking technology "works on algorithms that use your driving style to predict how likely you are to have an accident and how expensive it will be if it happens." Among the myriad data points that could be collected are braking frequencies and commuting routes.
This may seem innocuous, but the potential use of such data makes the film "Minority Report" seem less like fantasy than spot-on prophecy. In that flick, humans have developed technology to fight "pre-crime" — that is, to stop crimes before they occur and punish people for allegedly preparing to commit said crimes.
"Telematics-based insurance" could easily become the insurance-industry realization of that technology. It could help insurers charge you higher rates for embracing driving styles and geographic routes that supposedly mean you are about to incur collision costs, even if you haven't actually incurred said costs — and even if you never will incur said costs in the future. Put another way, rather than charge you higher premiums after you incur costs, the companies can use this technology to preemptively punish you beforehand a la a Department of Pre-Crime.
What's wrong with such a system? The assumptions baked into the algorithms, that's what.
Yes, actuarially speaking, your particular braking method may suggest you are more likely to crash at some point. But citing generalized odds to assume that you in particular will definitely crash in the future — and to then act on that assumption by charging you higher premiums in the present — would be both illogical and predatory, forcing you to pay for accidents that haven't occurred.
Of course, Flo insists the system today only exists to give customers premium discounts for "good" driving. However, if and when the devices become a prerequisite for insurance — which many experts predict will happen — we would likely see a system in which the standard premium is inflated and the discounts for "good" driving only slightly reduce premiums.
What can be done about this? Fox reports that some states "currently have specific mandates that prevent insurance companies from requiring" the tracking devices. That's a good step, but the regulation is easy for the industry to get around with punitive pricing schemes for those who do not put the devices in their vehicles.
No, the only real protection is for states to ban targeted premium hikes against drivers who haven't increased payout costs for their insurer.
Insurance executives will no doubt say that's an unacceptable government intervention into the "free market." But, then, so too is the government requirement that all drivers buy car insurance. And if states are going to force people to be the insurance industry's customers — a mandate that is a financial boon to insurers — then in exchange, it's fair to require those companies to adhere to some basic consumer-protection regulations.
Without such rules, Flo or another one of her Big Brothers will probably soon be in your car — whether you like it or not.