Welfare Implications of Proprietary Data Collection: An Application to Telematics in Auto Insurance

35 Pages Posted: 2 Mar 2018 Last revised: 8 Jun 2018

See all articles by Imke Reimers

Imke Reimers

Northeastern University - Department of Economics

Benjamin Shiller

Brandeis University - Department of Economics

Date Written: May 29, 2018

Abstract

Concerns about anti-competitive effects of proprietary data collection have motivated recent European data portability laws. We investigate such concerns and search for evidence of direct benefits of data collection in the context of Pay How You Drive (PHYD) auto insurance, which offers tailored discounts to drivers monitored by telematics devices. We exploit the staggered entry of PHYD insurance across states and insurers in a difference-in-differences framework, and we replicate the main findings using state insurance regulations as instruments for entry timing. We find a meaningful impact of PHYD programs on fatal accidents, but we find no evidence of antitrust concerns.

Keywords: Proprietary data, data portability, oligopoly, competition, asymmetric information

JEL Classification: D43, D82, L13, L40

Suggested Citation

Reimers, Imke and Shiller, Benjamin, Welfare Implications of Proprietary Data Collection: An Application to Telematics in Auto Insurance (May 29, 2018). Available at SSRN: https://ssrn.com/abstract=3125049 or http://dx.doi.org/10.2139/ssrn.3125049

Imke Reimers (Contact Author)

Northeastern University - Department of Economics ( email )

301 Lake Hall
Boston, MA 02115
United States

Benjamin Shiller

Brandeis University - Department of Economics ( email )

Waltham, MA 02454-9110
United States
781-736-5205 (Phone)

HOME PAGE: http://benjaminshiller.com

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