Should usage-based insurance data be transferable from one insurer to the next?

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Car insurance rates can sometimes feel like a mystery. Traditionally, insurance companies take into account factors that drivers can control (their record, the type of car they use, where they live) as well as factors they can’t (their age and sex) to spit out a dollar figure that, to some, might seem detached from how safely they actually drive.

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Usage-based insurance (UBI) purports to offer a more accurate, personalized picture of someone’s driving. Using a wide range of telematics technology — such as smartphone apps and devices that plug directly into a car’s diagnostics — UBI measures all manner of information about how someone drives: mileage, speed, route, cell phone use while on the road, instances of rapid acceleration, cornering, and hard braking. An algorithm then crunches that data and pumps out a score that determines a driver’s premium.

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Should usage-based insurance data be transferable from one insurer to the next? Back to video

The appeal of UBI is that it’s nominally more objective than traditional car insurance. Backed by data, it rewards good drivers with discounts and, in some provinces, punishes bad ones with surcharges. According to a report from the non-profit Consumer Federation of America, such programs “have the potential to usher in a new era in auto insurance pricing that would lower costs for safe drivers and incentivize safer driving generally.”

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Canadian insurance companies began introducing UBI in the 2010s , and over the last several years, more and more insurance providers have offered UB—it’s now available in six provinces, including Ontario, Quebec and Alberta—and more drivers are using it. Between 2019 and 2020, there was a 43 per cent year-over-year increase in the percentage of drivers who opted into UBI when filling out a car insurance quote on LowestRates.ca.

But UBI’s growth in popularity poses a thorny question: as more and more drivers amass a mountain of data about their driving habits, should they be able to use that data to secure lower rates when they shop around for car insurance ?

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Data ownership and portability

As it stands, the answer depends on where you live. In the European Union, the General Data Protection Regulation has enshrined the right to “data portability,” a concept that describes people’s ability to receive personal data collected by businesses, apps and other digital services and transfer that data to others.

But in Canada, “there is no right to data portability,” says Chelsea Colbert, policy counsel with the Future of Privacy Forum, a Washington D.C.-based think tank. Here, UBI data belong to the insurance companies that gather it, not the drivers that produce it. That means that a driver with one insurance company can’t use their UBI data as proof that they’re a good driver when soliciting rates from another provider.

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Officially, regulators recommend that the industry allow data portability to ensure healthy competition. The Financial Services Regulatory Authority of Ontario, for example, which regulates car insurance in the province, recommends that “insurers should… facilitate drivers using their personal UBI data for the purposes of entering into a contract with another insurer.”

Colin Simpson, CEO of the Insurance Brokers Association of Ontario, says that “it would make logical sense for a consumer’s data set to be owned by the consumer and therefore transportable.” 

But, he adds, that’s easier said than done. Each insurance company collects different data using their own devices and apps, and it crunches that data with dissimilar algorithms. “So although the data may be available, it may not be as useful as we would imagine—today,” says Simpson. “As technology and the products advance, that may change.”

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Could we ever see data portability allowed in Canada?

Colbert is hopeful that Bill C-11, the Personal Information Protection and Electronic Documents Act , will soon help Canada establish guidelines for dealing with data portability, including how to make sure that UBI data is standardized so that any insurance company can use it. But because insurance is a provincial matter, she suspects that additional legislation will be required at that level of government to make sure that drivers can use their UBI data to hunt for the best rates.

That legislation may prove even more essential as vehicles, particularly self-driving cars, become ever bigger producers of data. “It’s about making sure that organizations are being transparent about what data is being collected, what it’s being used for and who it’s being shared with,” says Colbert. “If a consumer agrees to share their data for a benefit, I think that is a good thing, so long as they know what they’re sharing and what the implications could be.”

LowestRates.ca is a free and independent rate comparison website that allows Canadians to compare rates from 75+ providers for various financial products, such as auto and home insurance, mortgages, and credit cards.