Why would you want to be spied on? At Privacy Laws & Business 28th Annual International Conference, 6 July 2015, Helena Wootton talks about the data protection aspects of tracking and monitoring driving habits using a ‘black box’. Source: Privacy Laws & Business UK report, July 2015 - www.privacylaws.com

1. NQ =======griv=OMNR PRIVACY LAWS & BUSINESS UNITED KINGDOM REPORT © 2015 PRIVACY LAWS & BUSINESS
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C
harlotte Halkett Marketing
Actuary from Insure The Box
– a UK motor insurance
company, and Helena Wootton, a
Partner with law firm Browne
Jacobson came to Privacy Laws &
Business 28th Annual International
Conference held at Cambridge, on
6 July, to explain why their customers
voluntarily agreed to be tracked and
monitored by a ‘black box’, whilst
driving.
Halkett explained that the UK
market is very competitive. There are
over 130 brands, many very small
operations. young drivers wanting to
drive at age 17 or 18 can easily pay
between £3,000 and £4,000 a year for
their car insurance. It is probably the
most expensive purchase in their lives
so far.
why Do younG Drivers pAy so
muCh?
There are four key factors which make
insurance expensive, some particular to
young drivers compared to other
drivers. Firstly, fraud is a major cost to
insurers, passed on to their customers.
It costs the industry around £4.18
billion a year and much is driven by
organised crime.
Secondly, in the UK, insurers carry
unlimited liability for personal injury
not just to the client but to third
parties.
Thirdly, young people are very
much riskier in their first months and
years of driving than more experienced
drivers.
Fourthly, UK discrimination
legislation means that insurance pricing
can no longer be made on the client’s
gender, one of the few key risk
indicators available before an insurer
can gain any factual basis of an
individual’s driving history. A 17-year-
old boy is twice as expensive as a 17-
year-old girl in insurance risk terms,
but this can no longer be reflected in
the price they pay.
whAt Are younG people’s
expeCtAtions of serviCes?
They expect tailored, data rich services
(such as Amazon, Google, Wikipedia)
so that buying products or services
becomes a two way experience. They
expect rewards for usage (such as
loyalty cards or points). They expect
access via smartphones, personalised
apps and a 24/7 presence across many
media including text messaging. They
expect to be entertained. The message
is “Treat me like an individual. I want
my data to work for me”. But how
does traditional insurance match up to
this? In one word: poorly. Traditional
insurance companies typically interact
with their customers only on two types
of occasion – when payment is due and
if a claim is made. In neither situation is
there much fun or joy for the
consumer. Motor insurance is
compulsory by law, so the customer’s
purchasing decision is largely confined
to ‘which brand’.
roAD sAfety AnD younG
Drivers
Road deaths, although falling year-on-
year, are still one of the major forms of
non-natural death in the UK. There are
around 1,700 fatalities a year – a
number which is largely just ‘taken for
granted’ and gets few headlines
compared with other, less common
causes. young (and thus inexperienced)
people are disproportionately much
more vulnerable. Even in their first
‘driving years’, a 17-year-old is 40%
more likely to have an accident than an
18-year-old. young drivers tend to
have more accidents of all sorts, and
more ‘bad’ accidents. young drivers
drive older (cheaper to buy) cars
(typically 10 years old or more), with
fewer safety features.
insure the box
The aim of Insure The Box (ItB) is to
“help young and inexperienced
drivers get reasonably priced
insurance and motivate them to drive
safely”. Safety is a key part of ItB’s
Mission Statement.
ItB is the UK’s leading telematics
provider. They began trading in June
2010 and currently have over 500,000
sales (measured as both new and
renewals). They have accumulated
more than 2 billion miles of data; a vital
edge in gauging risk of existing and
potential customers.
In 2013 ItB linked with Tesco to
promote their offering as the ‘Tesco
Bank Box’ and also promoted the
‘Drive like a Girl’ campaign (a girl’s
driving being statistically safer).
ItB has designed its own telematics
platform both to provide the
information it requires, and also for
security reasons.
In December 2014 a majority stake
in the company was bought by Aioi
Nissay Dowa Insurance Europe, a
Japanese insurance company closely
linked to the Toyota group.
whAt mAkes telemAtiCs
Different?
Telematics means that the company
installs a ‘black box’ into the vehicle,
often behind the dashboard. The box is
designed and installed to be both
tamper proof and fraud proof.
ItB has its own team of installers,
providing both a friendly face for the
customers to raise questions and
queries with, and a sharp pair of eyes to
ensure the insured person and vehicle
details match those as claimed on the
application.
ItB also has an active online portal
and is proactive in communicating
with its customers via a range of
social media – termed ‘social
listening’.
Its “Super Direct” service means
the company is not in contact just
once a year, but are in close regular
contact with their customers and has,
for example, a monthly reward
initiative.
Consensual tracking for motor
insurance purposes and DP risks
Young people are offered black boxes to monitor their habits. Whilst they may have a more
relaxed approach to collection of data, consent is needed as well and transparency.
By robert waixel.

2. © 2015 PRIVACY LAWS & BUSINESS PRIVACY LAWS & BUSINESS UNITED KINGDOM REPORT griv=OMNR NR
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whAt Does the box Do?
It collects data about, among other
things, the vehicle’s location, speed,
braking and acceleration, and it
transmits the data back to ItB in real
time. This is therefore, in effect,
monitoring the driver’s driving
behaviour. The information can also be
tracked in real time through a portal
but real time tracking would not
usually be done by ItB unless there was
a particular reason to do so.
whAt if there is An ACCiDent?
ItB’s instant awareness of an accident
provides a First Notification of Loss
(FNOL) to other parties. If the car is
still moving, ItB would communicate
by email, but if it is stationary ItB
would try calling the driver’s mobile to
see what help might be needed. Drivers
often respond even in a serious
accident. It may be that ItB just sends a
breakdown vehicle to the vehicle’s
known location, and also notify the
driver’s relatives if there is permission
for this communication. If the accident
were serious, ItB would notify the
emergency services. Again, knowing
the vehicle’s exact location is a key
safety feature, as is the trust from the
emergency services that this call is not
a false alarm. ItB typically deals with 20
such emergency calls per month.
But the most important safety
feature, and one that acts as a reward
by reducing ItB premiums to an
individual driver, is by influencing the
insured’s long term driving behaviour.
It is certain that this improved driving
behaviour saves lives, and it is hoped
that it will become a part of their
driving habits for the rest of their
motoring career.
key business benefits
From an insurer’s viewpoint, the data
gathered by the telematics from this
and ItB’s other customers provides
very valuable data on which to provide
tailored renewal premiums based on an
individual driver’s known behaviour
and track-record. Small accidents may
not put up the premium dramatically,
and 95% of customers see a drop in
their ItB price on renewal.
ItB typically sees a 30% reduction
in the risk of a driver between month 1
and month 11 of them being insured.
Their driving habits change from just
being compliant (think ‘speed
cameras’) to an ongoing dynamic
attempt to drive in a safer way.
The business benefits to ItB are that
it has been able to offer dramatically
cheaper premiums to drivers who
prove they have been careful drivers, a
better and faster claims service (with
less argument over the facts of what
happened), a higher renewal rate, a
reduction in fraudulent claims, and a
more intimate relationship with their
customers. These are all major
competitive advantages. Along with
this, of course, are the safety aspects of
improved driving standards and lives
saved.
why woulD you wAnt to be
spieD on?
Helena Wootton, Partner, law firm
Brown Jacobson, then went on to
examine the data protection aspects of
the operation. Obviously many young
people have an inherent distrust of
authority and being monitored.
Against this they are often quite willing
to give up aspects of their privacy in
return for perceived benefits, and do so
on a daily basis.
A key aspects of this is the user’s
trust. They expect the organisation’s
collection and use of their data (or that
of their vehicle) to be fair and
proportionate. This goes to the heart of
the matter, regardless of what may be
legally collectable under the terms of
the contract. Equally the insurance
company has an obligation to educate its
customers by as many means as practical
(for example, FAQs, privacy notices)
and follow Association of British
Insurers (ABI) best practice guidelines
on what it does with the collected data.
Much of the data, including
sensitive personal data, is gathered on
the basis of consent. It is important that
only relevant data is gathered, and kept
only for as long as needed, although
anonymised data may well be retained
for long term modelling purposes.
If ItB received a subject access
request, of course, the raw data is
useless to a data subject – it needs to be
translated into formats the data subject
can comprehend. Similar translation
would be required if the police needed
access to the data, and ItB would
usually only do so on receipt of a
production order from a court, or with
the insured’s consent (if they were
trying to prove their version of an
accident for example). A similar
situation would prevail in the case of
fraud investigations.
Under ABI guidance the insurance
company has also to be clear about any
third parties, such as the box fitters, IT
or third party service companies with
which it might share some or all of
the data.
Telematics are being encouraged
under the EU Single Digital Market
Strategy. ItB currently operates only in
the UK but its model is being followed
with interest elsewhere in Europe,
where there are some pilot schemes. In
the future, it is possible that the ‘big
data’ gathered could be used to let local
authorities know about their accident
hotspots, a topic about which most are
largely ignorant, since they only are
aware of ‘reported accidents’. But this
could be just the start of a long and
slippery slope for using the data much
more widely.
Robert Waixel is a part time lecturer at
Anglia Ruskin University, and at RW
Systems is an independent consultant,
tutor and speaker. He has been part of
the Privacy Laws & Business team of
conference reporters continuously since
1995.
Email: robert.waixel@tiscali.co.uk
auThor
Insure The Box: www.insurethebox.com
Drive like a girl: https://www.drivelikeagirl.com
Tesco Bank Box: http://www.tescobank.com/car-insurance/young-drivers/index.html?atlas-
source=paid&cmpid=ppc/acq/ci/box/g/bp/na
YouTube link to BBC London News Report “Insurance Black Box tracker saves a Surrey
man's life – Jean Mackenzie reports”: www.youtube.com/watch?v=bDKxDaAI0SA
Deloitte, Connected vehicles enter the mainstream, US Survey, 2011
http://www2.deloitte.com/content/dam/Deloitte/us/Documents/manufacturing/us-auto-
telematics-06252012.pdf
informaTion

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