When a driver gets a speeding ticket or is involved in an accident, their car insurance rates are expected to increase. However, most drivers would not expect to see their rates increase for every instance of speeding, rapid acceleration or forceful braking. But that is what the New York Times reported is happening to people who drive cars made by General Motors.
The publication recounted the experience of a Chevy Bolt driver who was surprised to see his insurance rise by 21%. When the driver inquired about the inflated rate, an insurance agent directed him to LexisNexis Risk Solutions, a data broker that provides information-based analytics for business customers.
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The Times reported that the driver requested and obtained a consumer disclosure report from LexisNexis and discovered that GM had kept track of 640 trips made in six months. The report did not show location, but other information included dates, distances, start and end times, and every time the driver sped, braked hard or accelerated sharply.
According to the Times, GM provided the trip information to LexisNexis. The broker then analyzed the data and created a “risk score” that insurers can use to determine coverage costs.
Sometimes, insurance companies can access this information through usage-based insurance, also known as “pay how you drive” and “pay as you drive.” Other times, automakers can get it through internet-enabled vehicles that allow drivers to connect to their cars through an app.
But it’s not just GM doing this. The Times explained that other auto companies, including Kia, Hyundai and Honda, have begun offering opt-in features in the connected-car apps that rate a person’s driving. That information then goes to companies like LexisNexis and is sold to insurance companies. The insurance companies need customer consent to access the information, but they typically get it when people buy car insurance and agree to standard terms and conditions.
The Times reported that, in the case of GM’s OnStar Smart Driver feature, company spokesperson Malorie Lucich said that the service is optional to customers and educates about safe driving behaviors or vehicle performance. Lucich added that the information “may be used to obtain insurance quotes.”
