Insurance Data Tracking in Apps Raises Regulatory and Privacy Concerns

App-based tracking of consumers' location and driving behavior has become a notable concern in the U.S. insurance industry. Popular family location apps, such as Life360, may collect extensive driving data without explicit consumer awareness, potentially impacting car insurance rates. Emerging lawsuits, including one led by the Texas Attorney General, challenge data broker Arity and its practice of embedding tracking technologies in these apps without clear disclosure to consumers. Arity, owned by Allstate, reportedly collects and sells driving behavior data to insurers, sometimes without consumer opt-in consent.

This raises questions regarding privacy, regulatory compliance, and informed consent in data usage within insurance underwriting and pricing models. The controversy also highlights the risks of relying on granular telematics data, as evidenced by reports of individuals facing rate increases despite safe driving records, partially due to inaccuracies or misinterpretations of app-collected data. Legislative efforts, including the proposed Delete Act at the federal level, aim to enhance consumer control over personal data, allowing users to request deletion of data gathered by third-party brokers and opt out of tracking programs, though the bill's passage remains uncertain.

This ongoing situation emphasizes the evolving regulatory landscape and insurer practices around AI-driven and app-facilitated data analytics in auto insurance risk assessment and pricing strategies.