How smart cars exposed the dark side of driving

Smart Cars
Smart Cars

Starting at just under $49,000, the Cadillac XT6 is billed as a marriage of “luxury, speed, power and handling” in promotional brochures.

The seven-seater SUV boasts a sunroof, heated front seats, a surround sound speaker system and a reported top speed of 132 miles per hour.

It is also – like many other cars today –  essentially a computer on wheels, full of technology and sensors that constantly monitor performance and watch out for hazards.

While that sounds like a good thing, for Romeo Chicco it has turned into a nightmare.

Three months ago, when the American motorist was trying to renew his car insurance, he discovered his vehicle had been spying on him.

Worse still, it had passed on his information to insurance providers, which were now seeking to nearly double his premium.

“[Chicco] felt extremely frustrated and shocked by the entire situation,” says a class action lawsuit filed on his behalf in Florida.

“He would not have even bought the Cadillac vehicle to begin with had he known of this grave invasion of privacy.”

The suit seeks damages from Cadillac owner General Motors and data analytics company LexisNexis, which bought and sold Chicco’s data. The case has thrown a spotlight on how manufacturers are looking to monetise the wealth of data generated by the modern car.

Harvesting this type of information  – known as telematics – is not a new development: many consumers will already be familiar with “black box” devices offered by some insurance companies as a way for drivers to secure lower premiums.

However, as the internet-connected car becomes the norm, most vehicles now come equipped with this technology built in. 
That is prompting battles around the world about how the data can be used and who should get access.

“Manufacturers have actually got reams and reams of data but, frankly, do very little with it at the moment,” says Edmund King, president of the AA.

“Our view is that drivers should have the right to say how, where and when that information is used.”

Cadillac XT6 SUV
Cadillac XT6 maker General Motors has been sued by a driver who discovered his vehicle was spying on him - Vehicles / Alamy Stock Photo

The sheer amount of data hoovered up by the modern car is mindboggling in its variety.

Many now record the vehicle’s position every few minutes, the number of times seatbelts tighten because of harsh braking, the destinations punched into the navigation system and even what connecting forms of transport a driver uses, among a plethora of other data points, according to a study by the Brussels-based Fédération Internationale de l’Automobile (FIA).

Some companies, including the AA and rival roadside assistance provider the RAC, want to use the wealth of technical information generated, such as engine diagnostics and tyre pressures, to detect car problems early on, so they cost less to fix.

But it’s not just the vehicle that is under the microscope: the data can also tell you about the personal driving style of its owner, such as whether they regularly break the speed limit or have a tendency to accelerate and brake sharply.

In the US, the way this data has been collected and used – allegedly without the consent of some drivers – has exposed the dark side of telematics.

Earlier this month, the New York Times revealed how Kenn Dahl, the owner of a software company near Seattle, was told the cost of insuring his Chevrolet Bolt would have to rise by more than 20pc because of the information picked up by his car.

Like Chicco, Dahl says he signed up to a “smart driver” service, promoted as a way to help motorists improve their driving, which handed over his data to LexisNexis without his knowledge.

LexisNexis then used the information to compile a 258-page “consumer disclosure report” – half of which was dedicated to a detailed breakdown of every time he or his wife had driven their car in the past six months.

Over 640 journeys, the vehicle had noted their start and finish times, mileage, speeds travelled and instances of sudden braking or acceleration.

Insurers then used this to calculate a more personalised – and higher – premium for Dahl’s Bolt.

A spokesman for LexisNexis said insurance costs are based on “many factors” and argued that telematics can be “extremely valuable in helping consumers improve their driving and lower their risk”. General Motors has said it is reviewing Chicco’s complaint but pointed out that its driver services are optional.

In the UK, car makers insist a repeat of these American cases could never happen because of strict GDPR data rules. These mean customers must explicitly agree to share their information with insurers, meaning drivers cannot claim they were unwittingly duped.

Ford and Toyota are among the major manufacturers that openly advertise the ability to connect your car to your insurance policy.

“The customer has to decide,” says a spokesman for the Society for Motor Manufacturers and Traders.

However, that is not to say British drivers who do share driving data with insurers are universally happy with how their data is used.

Typically, when a driver has a telematic insurance policy via a black box installed under the hood, motorists will be given a live score for their driving via a smartphone app. As part of their deal, they are required to stay above a minimum threshold.

Several cases referred to the Financial Ombudsman show drivers can be caught unawares by things that can send their score nosediving.

Drivers complain they are often marked down for a string of seemingly innocuous things, including driving late at night for work, hitting potholes on country roads and even for simply living in highly-trafficked areas such as cities.

In one recent example reported to the ombudsman, a man had his policy cancelled by his provider – putting a black mark on his credit profile – after leaving his car stationary for two weeks while he went on holiday.

The insurer claimed he should have provided notice he was going away. But the man has since been awarded costs by the ombudsman and the company ordered to strike his cancellation from the record.

“I wouldn’t reasonably have expected Mr F to make [his insurer] aware that he was going on holiday and wouldn’t be driving for around two weeks, nor have I seen supporting evidence that this was a requirement under the policy,” the ombudsman said.

In another case, a woman had her policy cancelled after her score dropped below the minimum level – all because she was not accelerating in a way her insurer deemed acceptable.

“The rest of her driving behaviours bar her acceleration were showing as good or above,” the ombudsman noted, before adding that the company had declined to explain the ratings because the calculation was “commercially sensitive”.

Some insurers remain reluctant to explain the methodology behind their telematics policies, even as they claim they encourage safer driving.

According to major insurance provider Admiral, “consistently harsh acceleration or braking has a negative impact on your score”, as does travelling between the hours of 10pm and 4am. Another provider, Zego, says cars must always stay under the speed limit, including when overtaking.

This micromanaging of driving and constant surveillance is why many older drivers baulk at telematics policies, says the AA’s King.

“You do find kind of resentment towards it,” he adds, “and quite often you get parents saying ‘I don’t want my driving being logged’.

Telematic insurance policies, usually via black boxes installed under the hood, are currently most prevalent among drivers aged under 25, according to Max Thompson of Consumer Intelligence.

According to his company’s research, these policies have broadly helped keep costs down. Motor insurance premiums for younger drivers have increased more slowly than those paid by other age cohorts since 2013.

While premiums for people aged 50 and above jumped by 273pc over the period, those for under-25s rose by just 134pc, Consumer Intelligence says.

“Without these policies, under-25s would be paying a huge amount more,” adds Thompson.

King believes telematics can play a positive role when it is used to detect mechanical faults.

“If we can prevent more breakdowns using car data, then that has got to be a really positive thing for consumers and, indeed, for us,” he says.

There can also be some more unexpected discoveries.

“One of my colleagues had a device in his car and it went in for a service,” King says. “He happened to check online and saw it was being driven at 95 miles per hour through a 30-miles-an-hour zone – one of the mechanics from the garage had taken his car out.

“There are some useful things you can check.”