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Nathan Golia
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Battle Lines Drawn on Insurance Data Use

Some companies vow to protect consumers from use of their personal data by insurers.

Not an interview has gone by where I've spoken with an insurance company executive on such topics as automotive telematics, social media, and big data where the phrase "privacy concerns" hasn't been used. Insurers are caught in between wanting to leverage new data sources for better underwriting and rating, and knowing that the industry's reputation makes it difficult to do so without a fight.

For an example, check this headline on Insure.com: "First vehicle-monitoring devices, now this" -- demonstrates potential exasperation with insurers' insidious presence in their policyholders lives, as illustrated by USAA's patent for an in-home data recorder.

The recorder, according to the article:

will record conditions that "have led to damage or destruction of the building" or to "forecast the possibility of future damage or destruction." The device can track the temperature, wind speed and mechanical vibrations as they affect the house, as well as humidity, which could cause mold in the walls.

The writer goes on to say that it sounds like a good idea "for the insurance company, but not necessarily for the homeowner." It also quotes a consumer-group leader who outlines how insurers could use the data from such a device to cancel a policy. And this is talking about a company with one of the highest customer satisfaction ratings in the homeowners insurance industry!

But the fight isn't just taking place in the media. Two companies have recently released security offerings where the benefit presented to consumers is in preventing insurance companies from gaining access to their data.

Southern Pines, N.C.-based Autocyb provides a "lock" for in-vehicle event data recorders, a mandate for which has been proposed. Autocyb says in a statement that "data collected by EDRs, without the driver's knowledge, has been used in civil and criminal cases in several states and in Canada. Automotive insurance companies are considering basing policy rates on EDR data. Auto manufacturers could use EDR data to void warranties. The possibilities are endless."

Boston-based Abine has expanded its DeleteMe service to mobile, allowing consumers to "search, find, remove, and monitor their personal information on data brokers' websites – all from the convenience of their iOS mobile devices, like iPhones and iPads."

Why would consumers want to do so? Well, information on data brokers' websites "is available to employers, insurance companies, and individuals willing to pay a small fee. Such practices leave individuals susceptible to inaccuracies that can result in damaging assumptions about a person's history, reputation, and character," according to the company.

There are a lot of exciting technological innovations going on in the insurance industry that warrant exploration and implementation. But these developments show that there's still a minefield of distrust with the industry among consumers that must be navigated with care if these strategies are to gain adoption.

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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Nathan Golia
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Nathan Golia,
User Rank: Author
3/18/2013 | 7:43:46 PM
re: Battle Lines Drawn on Insurance Data Use
Interesting, Rakesh. Are you saying that insurers don't have as much skill with data as you'd think, therefore privacy concerns are a long way off until carriers get better at using existing data sets?
Rakesh Sa
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Rakesh Sa,
User Rank: Apprentice
3/17/2013 | 5:43:41 PM
re: Battle Lines Drawn on Insurance Data Use
This is really good information to ponder on. But my concern is that our " Data Rich' industry has not been able to make use of the existing data and what will itl do with this information. I see some Insurers struggling with simple operational reports and dashboards. I am sure these companies also make an attempt to fall in line with the emerging technology requirements but what use this will be??
Nathan Golia
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Nathan Golia,
User Rank: Author
1/22/2013 | 3:50:59 PM
re: Battle Lines Drawn on Insurance Data Use
My apologies, Tom, as I didn't see your comment before today. I agree with your point that credibility of EDR data is going to be very important to auto insurers. In fact, I don't see a reason for consumers to adopt usage-based insurance without assurances that their data will represent accurately their driving risk.

Nathan Golia
Insurance & Technology
Autocyb
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Autocyb,
User Rank: Apprentice
1/15/2013 | 8:52:07 PM
re: Battle Lines Drawn on Insurance Data Use
I believe your headline is misleading since auto insurance companies have much to gain from locking down event data recorder data access. - They like everyone else would benefit if the vehicle had a safeguard against cyberattacks, tampering and misuse of electronic data. Currently, one cannot turn-off, disable or remove event data recorders (EDRs). -So, it's just simple common sense to control access to the vehicle's connector port. -The AUTOcyb - automotive cyber security lock can be used by individuals, fleets, lessors or rentals. - Basically, what they do is establish a chain of custody and therefore the data retains scientific and probative value. -I agree with your comment suggesting technological innovation warrants exploration and implementation. - For more information see www.autocyb.mobi or @autocyb on Twitter. - Regards, Tom Kowalick, President of AIRMIKA, Inc. -- manufacturer of the AUTOcyb (TM).
KBurger
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KBurger,
User Rank: Author
1/15/2013 | 5:55:59 PM
re: Battle Lines Drawn on Insurance Data Use
Who do you think is going to make the decisions about this-at insurance companies -- chief privacy officers? Legal department? Chief risk officers? What role do you think IT will play as this plays out -- basically as order takers? What are the regulators saying about it -- has theNAIC issued any kind of statement on this topic?
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