Telematics Can’t Pass Go without investing in Data Privacy

In the age of modernized insurance, more and more carriers are adopting telematics programs that offer personalized, behavior-based policies and automated claims services. However, as these programs become more widely available, consumer concerns over privacy continue to develop and stand as a potential barrier to adoption.

Privacy experts in the insurance sector agree that the best way for carriers to assuage these fears is to:

  1. Offer a great enough value to the end user to justify the data collected,
  2. Collect as little data as possible to deliver your services,
  3. Use clear and direct language to communicate to the end user what is being collected, why, and how, and
  4. Partner with a telematics service provider (TSP) whose modus operandi is “privacy by design.”

A recent PwC survey states that 59% of consumers are willing to share personal information in cases where it would improve safety and security for themselves or their families (2020). 88% of consumers agree that the extent to which they’re willing to share this data is predicated on how much they trust a given company (2017).

Telematics programs have multiple value propositions that elevate them far beyond traditional insurance. First and foremost, they can provide an unbiased, personalized insurance policy that puts the consumer in control – they drive well, then pay less. That extrinsic motivation to be a better driver also begets another unique value for policyholders: they become safer behind the wheel. Some TSPs further enable insurers to provide valued services like crash detection and stolen vehicle recovery systems during times of need and distress.

In order to provide this, though, the end user must be made aware of and consent to the sharing of their data – the data is what makes the system work. To achieve this, insurers should adopt a “no surprises” attitude toward data collection. Disclose to end users in clear and concise terms what data you’re collecting, how and why, and how you’re going to secure it. Avoid collecting any information not absolutely required to provide your services, and confirm the circumstances under which any data could be shared. Additionally, ensure consumers can readily find this information in your privacy policy, on an FAQ page, or even through marketing collateral. Don’t hide it deep in terms and conditions, or shrouded in legalize.

Finally, as an insurer, do your due diligence to partner with a TSP who employs privacy by design. Privacy by design is a ground-up, architectural approach that incorporates heightened levels of security in building products and programs, systems engineering, and new technologies by default. When you prioritize the privacy needs of your users above all else, that good will leads to an increased adoption of your telematics programs and continued, trusted engagement with the services you provide.

When evaluating TSPs, carriers should ensure companies are regularly meeting regulatory obligations and compliance checkmarks. Find a partner that sells only telematics services, not data. Not only does this build trust with your end user, it avoids the often laborious process of managing customer data requests and user rights violations set out by GDPR and CCPA legislations.

Privacy by design necessitates the need for regular external audits and assessments. TSPs who partner with reputable global standards organizations (like the International Organization for Standardization) are required to actively demonstrate the strength of their internal controls and processes on a regular basis, highlighting that their data collection and storage methodologies are transparent and up to code.

The future of insurance is telematics, and that future is here. Gain business by building trust: consumers will easily see the value of exchanging personal data when they see programs built with privacy by design.