Drivers See Auto Insurance Rates Spike Due to Secret Data Sharing

LexisNexis is supplying driving behavior data to insurance companies collected through apps like GM's OnStar Smart Driver.

Drivers of certain GM cars said they had no idea they were enrolled in OnStar Smart Driver, a free feature in GM brands’ connected car apps. Image via Shutterstock.

Drivers are finding themselves at the mercy of their own vehicles' data-sharing capabilities, leading to unexpected hikes in their car insurance rates, according to a report from the New York Times.

Kenn Dahl, a Seattle-based software company owner who drives a Chevrolet Bolt, encountered a bewildering 21% increase in his car insurance premium, despite a clean driving record. The root cause was a detailed data trail of his driving habits, unbeknownst to him, shared by General Motors with LexisNexis, a global data broker.

Dahl’s experience illuminates a growing concern among vehicle owners about privacy and consent. LexisNexis, under its "Risk Solutions" division, traditionally monitored vehicular accidents and violations but is now into analyzing granular driving data. This data, which includes trip durations, distances and driving behaviors like hard braking or rapid acceleration, is used to formulate a risk score for insurers.

This practice, while enhancing personalized insurance offerings, raises questions about transparency and consent. Many drivers, like Dahl, are unaware of the extent of data collection and its implications on their insurance costs.

Dahl got quotes from other insurers and found they were also high -- the LexisNexis data had been shared with eight insurance companies.

“It felt like a betrayal,” Dahl told the New York Times. “They’re taking information that I didn’t realize was going to be shared and screwing with our insurance.”

The automotive industry is increasingly integrating internet-enabled features that offer convenience but also pave the way for extensive data collection. While some programs offer opt-in mechanisms for usage-based insurance, there's a growing concern over "stealth enrollment" and the lack of clear disclosure about third-party data access.

Kia, for instance, announced an agreement with LexisNexis in February to "allow eligible customers who have enrolled in Kia Connect Services to opt in to share their driving behavior data to receive a personalized driving experience and to be more informed drivers." LexisNexis also supplies that data to insurance companies.

On the other hand, Dahl, along with several other owners of GM vehicles who also shared their stories of spiking insurance rates, found they had unknowingly been enrolled in OnStar Smart Driver, a free feature in GM brands’ connected car apps.

GM confirmed with the New York Times it shares “select insights” gathered by Smart Driver with LexisNexis and Verisk.

The incident has sparked a debate over privacy, consent and the ethical use of consumer data, with policymakers and regulators taking notice. California's privacy watchdog is probing automakers' data practices, and U.S. Sen. Edward Markey of Massachusetts has called for an FTC investigation, highlighting the potential intrusion of the "internet of things" into personal lives and its implications on consumer rights.

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