Texas sues Allstate, alleging insurance company illegally collects drivers’ data

Attorney General Ken Paxton is filing the lawsuit under the state’s new Data Privacy and Security Act.

By Michael MarksJanuary 17, 2025 3:39 pm, ,

Texas Attorney General Ken Paxton sued automaker General Motors in August, claiming that GM illegally collected data about drivers, which it then sold to insurance providers. Now, the AG’s office has filed another similar lawsuit, this time against an insurance company itself.

Allstate, the company, is accused of using third-party apps to track how people are driving without their knowledge.

Ezra Amacher, an editor at Insurance Journal, joined Texas Standard to discuss. Listen to the interview above or read the transcript below.

This transcript has been edited lightly for clarity:

Texas Standard: Well, just to be clear, I’ve done this before. Insurance companies sometimes do offer discounts to car owners who opt into driving monitoring programs. But this is different from those, right?

Ezra Amacher: Yeah, that’s correct. The insurance companies, they can somewhat track our driving – our speeds, how often we pick up our phones, how often we brake hard – and they use that to inform some sort of driving score that they might use to determine our next auto insurance rates.

So the insurers have a history of using our driving data to inform their insurance underwriting standards. But in this case, as we’ll get into, it’s a little bit different.

So do we know how Allstate collected this data, at least according to the attorney general’s office?

Well, according to the lawsuit that Texas filed on Monday, Allstate and its subsidiary entity paid mobile apps millions of dollars to install all of its tracking software into some third party apps such as Life360 and GasBuddy. And, again, according to the Texas lawsuit, this data, which was of millions of Americans, was then sold to insurance companies.

And, as we’ll get into more, it was without the consent or knowledge of drivers.

So does that mean this affected only Allstate customers, or did it affect anybody who might have been using one of those apps that you mentioned?

Yeah, that’s a great question. According to the lawsuit, Allstate would sell the information it collected through these apps to other insurance companies. So it’s likely that it’s not just Allstate drivers, but drivers who are insured by other companies, also, who were involved in this.

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Wow. And so I was going to ask how Allstate used the data. It sounds like one thing they did was make money off of it, selling it to other companies. What other information do we have about what they were doing?

Yeah, that is one way that they made a profit off of this, according to the lawsuit, is by selling it to other companies such as other insurers.

Another way is by using the data to inform their own underwriting. As you know, in Texas, as well as across the country, auto insurance rates have been going up and up and up lately. And according to this lawsuit, this is one more way that insurers are perhaps collecting information that they can use to increase rates on drivers based on their driving behavior.

So, again, this is information – like how often you might pick up your phone while you’re driving, if you’re speeding, if you have hard brakes – and it through this information, they create a driving score of sorts. And the driving score might determine what your next auto insurance premium might look like.

I mean, I could see so many issues with that. I mean, number one, I was just in the car with my husband. I was using my phone, but he was the driver. How does Allstate know who’s even behind the wheel and are they accusing me of being on the phone when I wasn’t the driver?

In that case, I could see so many issues. How has Allstate responded so far?

Allstate, and its subsidiary, Arity, have said that they help customers by ensuring accurate auto insurance price information that they receive after consent in a simple and transparent manner that fully complies with all laws and regulations.

Interesting. I mean, does that mean we all, when we open an app – you know, you scroll through the really long legalese and you hit “OK” – does that mean that there might have been something in there that we agreed to that made this okay? That Allstate is arguing that, anyway.

Yeah. I think that’s really the crux of the issue here on this.

This law that Texas is suing under is the state’s Data Privacy and Security Act, which I believe only went to effect about a year ago. And according to this statute, Allstate violated the state law by never providing notice or obtaining Texans consent directly to collect or sell sensitive data to companies like Arity and Allstate.

So I think it’s really going to be the the key issue here of whether drivers gave over their consent when they, you know, agreed on an app to share their location. So that’s be something that we keep an eye on here.

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