Car Insurance incentivizing use of tracking devices through discounted rates

The car insurance industry’s profit motive has led to innovative solutions for actualizing new revenue streams, one of which is planting geolocation tracking devices in cars in order to sell the data to third parties. The devices record a series of driving indicators including speed, use of brakes, time, and miles driven. This data, in turn, is used by algorithms to create driver profiles that are sold to insurance companies that set individualized insurance rates (Juang 2018).

Two salient issues exist regarding the use of tracking devices: voluntariness and privacy. Currently, the option to use the tracking devices is voluntary, but the insurance discounts received from activating the devices are substantial. In this way, insurance companies are able to leverage lower-income users to consent to practices that sell their location and personal data to any number of private actors. In a similar vein, the public knows little regarding the data collection, storage, and processing practices used by the firms and their effects on user privacy.  Some companies claim that they don’t track location data, although, given the lack of transparency of such systems, there is no way to verify such information.  In fact, some indicators point to Progressive Insurance monitoring and storing location data (ibid).