Your insurance is watching you

There may be a price to pay for our privacy... or at least there is for those who are willing to sell it. This is the dilemma faced by those who decide to take out a new usage-based car insurance policy. The cost of this policy is determined by driving habits, which the insurance company tracks by satellite. For instance, policy holders are penalized for driving at night or around the city, while sticking to highways and freeways - and the speed limit - results in savings. But does giving an insurance company access to our habits behind the wheel in exchange for discounts leave consumers overexposed? Would people be so keen to let their employer use a device to keep tabs on their movements?

"I'm not sure that it's in our best interest to create such a prudish consumer"

"I don't feel that my privacy is being violated - I took out the policy"

Already in use in other countries, this product was launched in Spain two years ago by Mapfre under the name YCAR, for young drivers between the ages of 18 and 30. Its big appeal is a saving of five percent just for taking out the policy, and up to 40 percent more if it is renewed. But in return, policy holders must agree to having a device installed free of charge in their vehicle, in an inaccessible place to avoid tampering. The unit records all kinds of information regarding where, when and how they drive, at all times of the day.

Now Mapfre has updated this policy, making the requirements more flexible. To be eligible for the maximum discount, young drivers cannot exceed 6,500 kilometers a year, no more than 200 of which can be at night (between midnight and 6am). They can't exceed the speed limit by more than 0.5 percent, while only 10 percent of the roads that they take can be urban. Other than that, failure to comply with any of the clauses progressively reduces the percentage of the discount. And some excesses eliminate it completely: driving over 17,000 kilometers all in all or more than 1,000 kilometers at night in one year, going more than nine percent over the speed limit or taking urban streets more than 45 percent of the time.

For José Miguel Marinas Herraras, a professor of ethics and sociology at Madrid's Complutense University, it seems like a very dangerous form of constraint. "Someone who must drive in the daytime, not go over 90 kilometers per hour and not go to supposedly suspicious places to visit their elderly aunt who lives in the country... What kind of a life is that? In the long run, I'm not so sure that it's in the insurance company's best interest to create such a prudish, restricted type of consumer," says Marinas.

Pablo Yárnoz, who is aged 22, took out the YCAR policy in early September. "At first I thought I was going to save a considerable amount of money because I'm a responsible driver, and I don't speed, but I'll save five percent at most," says this young man, who can check his driving record via an online account provided by Mapfre. "This month, I went over the speed limit on urban streets two percent of the time [driving, for example, at an average of 51 kilometers per hour on a road where the limit is 50] and that really reduces the discount," he says. Pablo also uses his car "to go out at night," because there is no public transportation where he lives. That requirement also means that he saves less money on his policy. But he doesn't regret having taken it out. "I don't feel that my privacy is being violated because it's my insurance company and I'm the one who took out the policy."

In that regard, Julio Laria, director of Mapfre Foundation's Road Safety Institute, tries to reassure young people: "The main concern that drivers have when they shop for this policy is whether someone might be able to know where they've been and at exactly what time," he says. "But we only have the overall data, not any specific information," Laria explains. Just a few minutes earlier, Francisco Marco, vice president of Mapfre's family division, showed us a map of Spain full of tiny red dots marking the position of the vehicles of the more than 60,000 young people who have already taken out the policy.

"We have no information or details about which vehicle or customer each one of them is," says the company.

The Spanish Association for Standardization and Certification (AENOR) guarantees this privacy. "The personal details of specific drivers and their location or driving behavior at a certain time are handled by different organizations," say sources from AENOR. In other words, the system can identify the exact location of the vehicle at any time, but the insurance company only receives general information about the customer's driving habits.

The company can't use any specific information against the policyholder in the event of an accident, either. Imagine that a driver gets in an accident while speeding. According to a YCAR expert, Mapfre receives the new data for each user once a day; thus, it wouldn't be able to determine whether the driver was going over the speed limit or not when the accident occurred. "Accidents are handled the traditional way," says Julio Laria.

Yet even though it doesn't have any specific details about its customers, the general data collected is also valuable. "They may say that they don't use the information, but they keep it and use it for whatever suits them, like a marketing plan," says José Miguel Marinas. With the data it collects, AENOR admits that what Mapfre can do, without violating its customers' privacy, is conduct studies about driving habits or mobility.

And consumers' associations are concerned about these studies. "When we give up our privacy in exchange for a discount, companies can obtain such an extreme profile of consumers that we put ourselves at risk, because they know exactly when we were most vulnerable to buying certain kinds of products," says Rubén Sánchez, a spokesperson from FACUA. What's more, the company can also sell this data to third parties, even though they are not broken down by consumer. Sánchez issues a word of warning: "We shouldn't let Big Brother control our living habits."

Yet Álvaro Bravo, a 24-year-old who has held this Mapfre policy since October 1, says that he doesn't feel any kind of threat. "On social networks, people already know what I do and where I am; I've already lost my confidentiality." And for him, the savings are worth it: he pays 430 euros for a policy that covers third-party liability and broken windows. With his previous policy, which he held for four years, he paid as much as - 700. "This year, they wanted to raise it to ¤900 and that is considering that I've only made a single claim and it wasn't even major. My car has never been in the shop," he says.

"For some people, restrictions on their driving may be worth it financially," says professor Marinas. "But as a collective phenomenon, if young people are willing to sell their privacy in order to save money, we're done for," Although he admits that the idea behind the Mapfre policy is "ingenious", this sociologist is worried about a culture where young people give priority to having a car over having a life: "It scares me to think what something like this could lead to."

But this loss of privacy can also result in greater safety. There are two exceptions to keeping the data confidential: theft or very sudden braking that might be connected to an accident. In the latter case, an accelerometer installed in the device captures the intensity of the deceleration, and if it exceeds a certain limit, Mapfre receives an alert. "We try to contact the driver to offer assistance. If he or she doesn't answer, and we see that the vehicle is not moving, we call 112 and give the emergency services the exact location," an expert on this product explains.

"Installing this system to locate the vehicle offers many more advantages to young drivers than disadvantages - it rewards good driving and can make our roads safer," according to sources from the Spanish automobile association CEA.

The director of the Mapfre Foundation's Road Safety Institute, Julio Laria, stresses this commitment to road safety. Far from controlling people's privacy, he thinks that usage-based insurance can make drivers more responsible behind the wheel. And this philosophy, according to Laria, does not contradict one of the other changes to the policy: having accidents doesn't mean one is a bad driver, and does not exclude them from obtaining discounts. "If a driver who hasn't had an accident in 10 years gets in a fender bender, you can't consider them to be a bad driver," he says.

What about young people? Are they good drivers? "The mere fact that they want to take out a usage-based policy says a lot about their profile," says Laria, who adds that 44.3 percent of all Mapfre insurance holders under the age of 30 choose YCAR. At least it says a lot about their need to save.