Kenn Dahl, a 65-year-old software company owner from Seattle, was surprised when the cost of his car insurance spiked by 21% in 2022. As someone who considered himself a careful driver and had never caused an accident, Dahl could not understand the sudden hike in premiums. When he inquired further, an insurance agent revealed that his LexisNexis report had contributed to the increase. This disclosure led Dahl to request a detailed consumer report from LexisNexis, which ultimately revealed alarming information about his driving habits.
The report provided by LexisNexis contained over 130 pages of data, detailing every time Dahl or his wife had driven their Chevrolet Bolt in the past six months. It included the dates, start and end times, distance traveled, and even instances of rapid acceleration, hard braking, and speeding. The most startling part of the report was that Dahl had not realized such detailed driving data was being collected by General Motors (GM), the car manufacturer, and shared with LexisNexis to create a risk profile for insurance companies.
How the Data Collection Works
GM’s involvement in the data collection process is through its OnStar system, which tracks drivers’ habits. The data gathered from Dahl’s vehicle was shared with LexisNexis, which then used it to provide a risk score to insurance companies. This score, among other factors, influenced the premiums set for Dahl’s insurance. GM’s data-sharing arrangements are not always transparent, and many drivers, including Dahl, were unaware that their driving habits were being used to determine insurance costs.
The rise of internet-connected vehicles has made it easier for car companies to track and collect detailed driving data from their customers. In the past, insurance companies incentivized drivers to install dongles or apps to monitor their driving. However, car manufacturers now collect driving data directly from vehicles, sometimes without the driver’s knowledge or explicit consent. This data is shared with insurance companies, who use it to offer usage-based insurance (UBI), where rates are personalized based on a driver’s behavior.
Consent and Transparency Issues
While some drivers willingly enroll in usage-based insurance programs, many are not fully aware of the extent to which their data is being shared. Automakers like GM, Honda, Kia, and Hyundai have made it easy for drivers to opt into these programs, but the fine print in privacy policies often makes it difficult for consumers to understand what they are consenting to. Many drivers unknowingly provide consent when they activate features like GM’s OnStar Smart Driver service, which tracks and rates their driving.
There are cases where drivers have been unknowingly enrolled in data collection programs. For example, GM’s OnStar Smart Driver service can be activated at the time of purchase or through the car’s mobile app. In some instances, car dealerships enroll customers in these programs without their knowledge, as salespeople may receive bonuses for getting customers to sign up. This stealth enrollment raises concerns about the transparency of these data-sharing practices.
Dahl is not alone in his frustration. Many drivers have reported unexpected increases in insurance premiums after discovering that their driving data was being collected and shared with insurance companies. In online forums for GM vehicles, including the Chevrolet Bolt, drivers have shared similar experiences, with some even mentioning that their insurance premiums doubled. These stories highlight a growing concern about the fairness of using such detailed data to determine insurance rates without proper consent or transparency.
A Cadillac owner from Palm Beach County, Florida, faced similar challenges. After being denied insurance by multiple companies, he discovered that his driving data was tracked through GM’s OnStar Smart Driver service. Despite not recalling signing up for the service, he found that his driving behavior—such as hard braking and acceleration—was being monitored and shared with LexisNexis. This led to a significant increase in his insurance costs, further emphasizing the potential financial consequences of these practices.
The Gamification of Driving Data
OnStar Smart Driver is marketed as a tool to help drivers improve their habits through gamification. Drivers earn badges for safe driving behaviors like “brake genius” and “limit hero.” However, this gamification often masks the fact that the data collected is being shared with third parties, such as data brokers and insurance companies. While the service claims to help drivers become better motorists, the lack of clarity about data sharing raises serious privacy concerns.
The practice of sharing driving data with third-party brokers like LexisNexis and Verisk has prompted concerns from both consumers and policymakers. Law experts argue that drivers’ expectations of privacy are being violated, especially when they are not fully informed about how their data is being used. Lawmakers in California and Massachusetts are investigating these practices, with some suggesting that the sharing of data between automakers and insurers could be a violation of federal law, specifically Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive business practices.
A major issue is that many consumers are unaware of the extent of data collection happening in their vehicles. Researchers have found that the privacy policies of car manufacturers and data brokers are often difficult to understand, filled with legal jargon that makes it nearly impossible for the average driver to know what they are consenting to. As one expert pointed out, car companies often frame these data collection practices as being for safety and improvement, when, in reality, they are primarily for profit.
The collection of driving data is not limited to GM. Other automakers, including Kia, Subaru, Mitsubishi, Ford, and Hyundai, also share driving data with brokers like LexisNexis and Verisk. While some automakers argue that they provide drivers with clear consent forms, many drivers are still unaware of how their data is being used or shared. The growing trend of data-driven insurance models highlights the need for greater transparency, consumer education, and privacy protections in the auto industry to prevent further exploitation of personal driving information.
