Smartphone data and car insurance

| Aug 24, 2016 | Insurance Law

Among the things that modern smartphones are incredibly good at is collecting data. The range of types of data these devices can gather is staggering.

Such phones can even collect data on the conduct of a driver when they are behind the wheel. Apps have been developed that can use the information and sensors on smartphones to track driving actions.

Some auto insurers are using programs to encourage their policyholders to use such apps and allow the insurer access to the driving-related data collected by the apps. Under these programs, insurers typically offer discounts to drivers who agree to use apps that collect and transmit such data.

One wonders if collection of policyholder driving-related smartphone data through apps will become a widespread and standard practice in the auto insurance industry in upcoming years. If it does, it could have the potential to have impacts in many different areas, including:

  • In risk assessments: Some have argued that smartphone data is a much more accurate predictor of a driver’s accident risk than traditional risk assessment factors used by insurers. So, it is possible that such data could lead to big changes in what the risk assessment process looks like for auto insurers.
  • In disputes: What evidence is available can have significant ramifications when an insurer and a driver get in a dispute over a claim. Digital data is among the things that can sometimes be evidence in such disputes. Depending on the quality and specificity of the data driver behavior data collection apps gather, one could perhaps see a time in the future when the data from such apps could shed some light on key factual issues in auto insurance claims disputes.
  • Out on the roads: It has been argued that drivers knowing that their driving is being monitored could lead to drivers acting in a safer manner. So, there is a possibility that widespread use of apps that collect driving data might result in fewer accidents and fewer auto insurance claims.

So, what happens with smartphone data collection when it comes to auto insurance in the future will be something worth watching for those connected to the auto insurance industry.

Source: Click2Houston, “Your smartphone knows if you’re a good driver,” Matt McFarland, Aug. 17, 2016