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Privacy and Access Council of Canada

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The high cost of affordable auto insurance

09/Nov/2020

In an attempt to drive down soaring auto insurance rates, the Alberta Government recently introduced Bill 41 to modernize the Insurance Act. 

On its surface, Bill 41 is a valiant effort to provide some relief from high auto insurance rates (although the Bill does not require cost savings to be passed on to consumers). A quick look under its hood is all it takes to see that the law is designed to make affordable insurance contingent on every driver relinquishing their privacy. 

The law expands the use of Usage Based Insurance (UBI), and directs the  Automobile Insurance Rate Board (composed mostly of long-time industry insiders) to decide the rules and guidelines for expanding the use of UBI technology. The law also gives the Board unlimited power to set its own terms and approve whatever programs it wants to — without oversight or any requirement to consult the OIPC or the public.

The law also grants the Automobile Insurance Rate Board new power so that it will be “better positioned to respond to consumer and industry needs.” Bill 41 is also clear that any rating program filed with the Board will automatically be “deemed to be approved by the Board” according to whatever rules the Board sets for itself.

In addition, under Bill 41, the Automobile Insurance Rate Board will be responsible to modernize Alberta’s system for setting insurance premiums, and “allow greater ability for industry to provide innovative insurance options.”

In particular, the Board will be allowed to decide the rules and guidelines for expanding the use of Usage Based Insurance technology that tracks mileage, driving behaviors, and much more. It’s important to remember that Bill 41 was based on recommendations of Alberta’s Auto Insurance Advisory Committee (whose members have extensive direct experience in insurance and advising government) — and the Committee notes that some insurers are eager to see UBI “be made mandatory to allow consumers to benefit from lower rates due to lower usage or due to provable good driving behavior.” As MLA Jon Carson observed, “this bill and the regulations that were put forward give the insurance industry virtually every single thing that they asked for.” 

In other words, Albertans will be entitled to affordable rates if they prove their good driving behavior by consenting to participate in a UBI program. Otherwise, they inevitably will be presumed to be high-risk drivers — which traditionally translates into higher rates. 

We have already seen this sort of coercive approach taken by insurers that promote ‘voluntary’ wellness programs that ‘incentivize’ employees to join by penalizing them if they or their spouses choose not to participate.

The prospect of expanding UBI usage foretells the wholesale monitoring of Albertans, and the collection of personal information far beyond what is reasonable, proportionate or necessary to provide affordable auto insurance rates. 

Here’s how:

UBI systems typically require a specialized smartphone app to be running AT ALL TIMES, including when the smartphone’s owner is asleep. The app monitors the GPS, gyroscope, accelerometer and other sensors in the phone, and can discern — with 99% accuracy (according to the developer of a UBI app used by Intact) — a phone’s precise location inside the car, and if it is being transported while walking, on a bike or in a bus. Its sensitive readings can also distinguish between “active use” (when the phone is in your hand and being used) and “passive use” (when the phone is in a holder/carrier or locked) — a proxy for distracted driving.

Because the apps must be running at all times, insurers and the app developer know will the precise location of your phone and will be able to calculate where you go, and who you associate with — at all times — as will anyone who is granted (or gains) access to the databases containing the detailed information about you.

As you can imagine, that sort of information is valuable to people who wish to control others, or to intimidate whether by harming, harassing, stalking, and otherwise exacting retribution for perceived injustices; and amassing it in one place makes an attractive target.

And since road safety is a matter of public policy, it would be easy enough for insurers to justify disclosing the information to government and police.

Government and media discussions about this Bill have focused on its more obvious provisions — but there has been no mention that sacrificing privacy (and having to bear the cost of a smartphone and data usage, which is beyond many Albertans” budgets) will be the cost of insurance ‘affordability’.

Steering Albertans to relinquish their privacy for a promise of reduced insurance rates will fuel further incursions into personal privacy, and greater public disenchantment and distrust.

Filed Under: Big Data, Data Protection, Government, Legislation, Privacy, Surveillance

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