Would you trade privacy for cheaper car insurance? Some Canadians do
'People have to understand what they’re giving up when they sign over their privacy'
It is billed as a way for vehicle owners to reduce their insurance rates, and measures everything from braking practices to speed in order to reward good driving habits.
Even so, Steve Carver has no interest in attaching a telematic device to his car, calling it "an invasion of privacy."
His long-time insurance company offered him one after he questioned why his rates went up last year, despite a clean driving record and a single claim years ago for a windshield.
"I said, 'I've been with your company all these years and you're treating me like a criminal,"' said Carver, who lives in Blockhouse, N.S., and has been with Intact Insurance for two decades. "I don't think it's right."
A telematic device is a small gadget that plugs into the port of a car and measures driving habits such as hard braking, acceleration, speed, distance travelled, time of day and, in some cases, location.
The move toward them is called usage-based insurance. The Insurance Bureau of Canada said it expects more and more insurance companies to start offering telematic devices to their customers.
'Potential to be very intrusive'
Privacy lawyer Nancy Rubin said it's a way to reduce rates for people who are good drivers, but they still need to be fully informed.
"It has the potential to be very intrusive," Rubin told CBC News, adding it is important customers understand what they are consenting to when they agree to use the device.
"The consent has to be express and it has to be plain-language consent," Rubin said. "People have to understand what they're giving up when they sign over their privacy."
Under both federal and provincial privacy legislation, consumers must consent to the type of personal information that's being collected, how it's being used and to whom it's being disclosed.
Companies can retain information only as long as is necessary and then must destroy it. Consumers must have the opportunity to opt out or change their consent.
Telematic devices generally transmit information to a third party, which then forwards it to the insurance company.
Rubin said the devices do not differentiate between drivers, so insurance companies "don't know if it's you or your teenaged son out driving, so what may happen is that your rating is influenced by the unsafe driving habits of your son."
Another concern is who has access to the data and how it is protected from hacking.
'Innocuous' information, says company
But Glen King, the director of product development for Allstate Insurance Canada, said the information being collected is "largely innocous."
"It's not going to harm anyone if it was lost and there's no chance that's ever going to happen," he said.
Allstate collects information on when people drive, how far they drive and their speed, King said, adding the company's devices do not use GPS to track locations. Allstate started offering the devices to some of its customers in Ontario in 2014. It expanded the program to Alberta in 2016.
"The intent was to put power into the hands of drivers and to reward those who practise safe driving behaviour with lower insurance premiums," King said.
Potential big discounts for users
Allstate offers an immediate upfront discount of 15 per cent to Alberta customers who agree to use the devices for six months. Users are eligible for as much as a 30 per cent discount in their premiums at renewal time, based on their driving habits.
Users can log on to a secure website and see what discount they're in line to receive.
King won't disclose how many customers have agreed to use the devices, but said 70 per cent of them are "earning some form of discount."
Rubin said consumers need to ensure that the information collected is only used for the designated purpose of reducing rates, not penalizing drivers.
"If it's used to underwrite and give you a policy, [ensure] it's not going to be used the other way to deny you that policy or for claims purposes," she said.
In Nova Scotia, the Utility and Review Board regulates insurance companies. A spokesperson said its approval of telematic devices includes a no harm-no foul clause, which prohibits insurance companies from penalizing people whose driving habits are questionable.
Allstate maintains there's no downside for drivers.
"We will never raise anyone's rate as a result of driving in the program," King said. "We're not ever going to increase someone's rate because they participated. You're either going to earn a discount or you're going to discover there are more opportunities to improve your driving."
Courts can compel insurers to turn over info
However, Rubin points out that while insurance companies agree to follow privacy rules in the event of an accident, it's possible they could be compelled by the courts to turn over the telematic data.
"If it hadn't been collected, it didn't exist and it wouldn't be there to be accessed. It's now available to be accessed so it may come back to haunt you in a way you didn't expect," she said.
She uses the example of someone who was in an accident and said they were going under the speed limit when in fact the data shows they were speeding.
Amanda Dean, vice-president Atlantic for the Insurance Bureau of Canada, said the solution for people like Carver who feel the device is intrusive is simple.
"They don't have to use them," she said, pointing out participation is strictly voluntary and people can shop around for their insurance.
That's exactly what Carver is doing.
"I just don't want to have it, plain and simple," he said.