April 16, 2024 — Another new frontier in our business of understanding and managing risk is the use of telematics, including wearable/driveable reporting devices. This is a field that has expanded rapidly in recent years in both retail and commercial insurance models. Like everything else we work with today, telematic devices churn out tons of data on how we drive and how we work. This new source of Big Data may also scoop up a good deal of incidental information about how we live and who we are. The overall telematics industry has been growing at over 10% annually and is currently running at about $48B this year.
That sum represents a lot of data. Who owns it? What can it be used for? What permissions and/or informed consent should be required? What uses of telematics-derived data are allowed in litigation or underwriting? One culture-wide phenomenon we are getting used to now is that new-tech applications run ahead of regulation. AI and telematics both share this confusing state of affairs in 2024. New technologies spring up and get implemented long before legislatures, courts, and lawyers can figure them out.*
This is where a Florida man comes in. Paul Carroll, writing in ITL, tells the story in an article titled "The Lawsuit That Had to Happen." While the specific case in question pertains only to retail auto insurance, it adumbrates a number of key questions with a much larger ambit. As Paul puts it, "When I drive my car, who owns the data about the trip? Me? The car manufacturer? My insurer? A data broker?" Add to that, what if you are driving a company vehicle for work? Now who owns the data, and how can it be used?
A Florida man has asked the question rather dramatically by filing suit against General Motors and LexisNexis after his auto insurance premiums increased based on teledata describing his driving habits. When he asked why his premiums had doubled, he was told, according to The New York Times, that "his 2021 Cadillac XT6 had been spying on him." The immediate issue is whether GM and LexisNexis had appropriate permissions to collect and review the data from his Cadillac. Did he actually sign up to allow such access — or not?
Aye, there's the rub.** The obvious question for all of us who trade in risk-related data from our growing array of telematic devices is do we have the proper permissions to release this information to underwriters, safety consultants, and any of the other folks we deal with in risk mitigation and related matters beyond the basics of claim administration? The auto insurance case is pretty straightforward. The information at issue concerns only driving behavior, like braking, acceleration, turning, etc. It's not hard to see how other reporting devices might gather more personal information. There have already been issues raised about employers using wearables to monitor employee restroom breaks, for example.
As we always point out, none of our discussion in this journal is legal advice, only a suggestion that, if you do collect the kinds of more detailed individual behavior information that wearables and other telematics can gather, perhaps you should consult with Legal and HR about what rules apply and what permissions and releases may be called for in your jurisdictions of operation. As we noted earlier, the point where regulations intersect new technologies is always a moving target, and right now, it is moving pretty fast.
Consider this: "Generally, it [the law] is at least five years behind technology as it is developing," according to Andrea Matwyshyn, a professor at the University of Pennsylvania's Wharton School, who tracks the intersection of law and technology. Five years seems optimistic to us. The point is that this gap is a serious risk issue. The adventures of a Florida man and his allegedly sneaky Cadillac XT6 provide a warning to the wise risk manager.
*Perhaps the earliest example of this on a large scale in the US was the adoption of railroading starting in the 1840s. No laws existed that applied directly to the first railroads, the high-tech of their day. One lawyer who made himself a tidy fortune figuring this out was an Illinois attorney named Abraham Lincoln.
**Hamlet, Act III, Scene I. The same phrase also appears in King Lear and The Tempest.
Author
Dr. Gary Anderberg
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