Insurers are not eager to reveal their business development and operations strategies and methodologies. Nor are they willing to divulge how they use mobile data and related analytics to find and keep customers. However, insurers are now being drawn into a discussion over geo-based data that is available via mobile devices.
Specifically in the property/casualty space, location data is a boon to insurers hoping to incorporate predictive analytics into personal and commercial lines property coverage. Public stirrings over the potential gathering of location-related data by two of the largest mobile device companies, Apple Inc. and Google Inc. for their respective iPhone and Android platforms has brought the issue to the attention of legislators.
Representatives from Apple and Google testified this week at a Senate Committee on the Judiciary, Subcommittee on Privacy, Technology and the Law, at a hearing titled, "Protecting Mobile Privacy: Your Smartphones, Tablets, Cell Phones and Your Privacy." Subcommittee chairman Sen. Al Franken (D-Minn.) called the hearing two weeks ago, after news surfaced that mobile devices collected detailed information about users' locations. iPhones and iPads store that data on a "consolidated.db" file within the devices.
Dr. Guy “Bud” Tribble, Apple’s VP for software technology, remarked that this is the third time he had been asked to testify (in other words, no one seems to be listening), stating, “Apple does not track users’ locations — Apple has never done so and has no plans to ever do so.”
During his testimony, Tribble did a fair job of defending his company, remarking that in its efforts to meet customer demands for prompt and accurate location-based services (such as shopping, travel and other activities), Apple does provide tools that enable consumers to control the collection and use of location data on all Apple mobile devices. He also said the device user is provided, as part of its agreement, information on how location data will be used. This information requires the user to click “consent.” The understanding is that the user has read and understood the following information:
“By using any location-based services on your iPhone, you agree and consent to Apple’s and its partners’ and licensees’ transmission, collection, maintenance, processing and use of your location data and queries to provide and improve such products and services”
The boilerplate language is pretty straightforward, but nonetheless akin to the insurance policy declaration page that policyholders rarely read or understand. But the point is the same: Apple does its part by putting it out there.
Tribble also said that Apple does not share personally identifiable information with third parties for their marketing purposes without that consent, and Apple further requires third-party application developers to agree to specific restrictions protecting Apple’s customers’ privacy. Read: the onus is on the user.
So why are insurers still in hot water? Because insurers, as third parties, are assumed to be using this data without the express consent of the user. Consider the statement made by Jessica Rich, deputy director of the Bureau of Consumer Protection at the Federal Trade Commission, who testified that The Wall Street Journal had “documented numerous companies gaining access to detailed information – such as age, gender, precise location, and the unique identifiers associated with a particular mobile (documenting the data collection that occurs through many popular smartphone apps) device — that can then be used to track and predict consumers’ every move.”
It’s no secret that insurers provide location-based data to policyholders for use in mobile apps. But not necessarily for the purposes of tracking the policyholder’s every move. Progressive, USAA, and Allstate all use geo data to fortify mobile apps that help policyholders locate service centers, process claims, and get real-time information. State Farm’s “Drive Smarter” app scores the driver’s performance using the device’s accelerometer and GPS location to record and measure the driver’s acceleration, braking and cornering.
But isn’t the point here that the user must consent to having their every move tracked? Since use of geolocation data is here to stay, insurers must put forth a greater effort to educate the policyholder (mobile device user) as to the ramifications of clicking “consent.” Hiding such information in the fine print of contracts makes the practice of collecting user location data seem more nefarious than it really is.
Along those same lines, what is the FTC doing to educate consumers about protecting their own privacy? This is not a one-sided issue.
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