Texas Attorney General Ken Paxton is suing Allstate and its data analytics subsidiary, Arity, for allegedly violating the state’s data and privacy security act by illegally collecting driver data from more than 45 million Americans.
The lawsuit alleges the defendants created a database to support Allstate’s underwriting and sold the collected information to third parties, including other insurance companies. It also alleges Allstate bought driver data from Toyota, Lexus, Mazda, Chrysler, Dodge, Fiat, Jeep, Maserati, and Ram.
The suit further alleges Allstate and Arity paid and incentivized app developers to integrate Arity’s tracking software into their apps, allowing the software to record data every 15 seconds.
Allstate has denied the allegations, stating that Arity’s data gathering allows consumers to attain more accurate insurance pricing.
Drivers face another rate obstacle
Insurance companies using driving data to set rates isn’t new.
“Insurers use an insurance history report showing your prior insurance history, a motor vehicle report from the DMV that shows reported police tickets and accidents, and a CLUE report from LexisNexis, which shows claims activity,” said Buddy Parkhurst, an agent with Insurify.
Drivers can also opt into voluntary telematics and usage-based programs that track driving behavior in the hope that their good driving will lead to lower rates.
But Paxton’s suit takes issue with using driving data collected from drivers not enrolled in a tracking program.
Paxton’s suit alleges drivers didn’t consent to collection of their data and weren’t aware of Allstate and Arity’s tracking. The data collected includes the geolocation of a person’s phone, their accelerometer, longitude, latitude, bearing, GPS time, speed, accuracy, and more, the suit charges.
The suit further alleges that Allstate harvested data from unsuspecting drivers and used it to justify increasing premiums, denying coverage, or even dropping coverage.
Texas auto insurance rates climbed 23% in 2024, landing at an annual average of $2,915 for full coverage, according to Insurify’s recent auto report.
A continuing trend
The lawsuit in Texas comes on the heels of a New York Times report exposing Arity last spring.
The Times reported that Life360, MyRadar, and Gas Buddy were sharing driver data with Arity, which the company used to make “driving scores” and sold to insurance companies. Drivers with poor Arity driving scores could face rate increases and coverage denial.
In another case, a class action lawsuit filed last spring alleged that LexisNexis and General Motors used the subscription-based OnStar program to illegally track driving behavior and sold the data to third-party companies, including auto insurers.
What’s next
Paxton is calling for Allstate to pay several fines, plus $100 per violation day. The attorney general is also demanding the defendants permanently delete the data and “make full restitution or restoration to all consumers who suffered a loss as a result of the acts.”
The attorney general is seeking a jury trial in the case.
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