Consumer Reports Investigates Auto Insurance Telematics.

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WHAT'S KNOWN AND UNKNOWN ABOUT CONSUMER DATA COLLECTED AND USED BY INSURERS

* An investigation of telematics, or usage-based, auto insurance programs by Consumer Reports (CR) reveals that auto insurers collect substantial amounts of information to calculate insurance premiums for participants as well as data that may be used for other purposes. This scale of data collection poses substantial privacy and discrimination concerns for consumers, as reported by CR. This investigation also provides consumers with a chart for comparing the pricing approaches of different companies; the four most common behaviors used by insurers to calculate premiums are:

* the number of miles driven,

* the amount of hard braking done by drivers,

* the time of day driven, and

* any phone use that occurred while driving.

Earlier this year, Consumer Federation of America (CFA) issued a white paper on the subject - Watch Where You're Going: What's Needed to Make Auto Insurance Telematics Work for Consumers - highlighting the need for regulators and lawmakers to provide stronger oversight of these auto insurance products. While telematics offers the prospect of reducing unfair pricing practices in the market today and incentivizing safer driving, CFA warns that guardrails must be established before consumers can feel confident that these programs are fair and do not create new risks for customers.

"Auto insurers have been promoting telematics programs to consumers, but for too long there has been a lack of useful information about how the programs evaluate drivers and the scope of the data used," said Michael DeLong, a Research and Advocacy Associate with CFA. "As a result, consumers have found it difficult to determine what information determines their premiums and to meaningfully compare the programs. Consumer Reports' new investigation fills a much needed gap, and highlights key concerns that consumers should keep in mind when they are considering these programs."

In telematics programs, auto insurers connect a device to your car or use a mobile app on your phone to collect information about your driving habits, which is then used to calculate your insurance premiums. Theoretically, if consumers drive safely and avoid risks, they could receive discounts based on their behavior. The promised discounts vary widely, from up to 15% for Farmers to up to 40% for Nationwide.

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