Techy narc cars are sharing driver behavior with insurers — and catapulting premiums

Oops, all spies… Car-tech advances have ushered in an era of heated steering wheels and dashboard Spotify apps — and perhaps a privacy nightmare. A report from The New York Times said that major automakers including GM, Honda, and Ford harvest detailed driver data (think: speeding, hard braking, phone distraction) and share it with data brokers like LexisNexis and Verisk, which then sell the data to insurers. The process is spiking drivers’ insurance premiums, often without their knowing why.

• Brake check: Some drivers’ premiums spiked by as much as 21% (half the average jump after an at-fault accident) once their insurer got their “risk score.” Some drivers who questioned their rates were sent personalized reports that ran over a hundred pages long.

• Self-inflicted: Several major automakers offer connected services that enable customers to track their driving habits (like GM’s “Smart Driver”). By opting in to the gamified service, drivers consent to their data being sent to insurers.

• Backseat brother: The harvesting of drivers’ data is its own industry (aka “automotive telematics”), and it’s set to reach $16B by the end of the decade. The data’s valuable to insurers and law enforcement (it’s been used to solve crimes).

Insurers are doin’ donuts… After raking in $19B in profits in 2020 — as cars stayed in garages and payouts plunged — auto insurers like State Farm and Progressive are still pumping premiums. US rates are up 26% so far this year, after the top 10 US auto insurers all won regulatory approval to significantly boost premiums. Economists say that rising car-insurance prices are pushing up inflation, which last month came in a little spicier than expected.