Privacy Protection, At What Cost? Exploring the Regulatory Resistance to Data Technology in Auto Insurance

Journal of Legal Analysis Vol. 15, 129-157 (2023)

29 Pages Posted: 26 Jun 2023 Last revised: 20 Mar 2024

See all articles by Omri Ben-Shahar

Omri Ben-Shahar

University of Chicago Law School

Date Written: June 20, 2023

Abstract

Regulatory and sociological resistance to new market-driven technologies, particularly to those that rely on collection and analysis of personal data, is prevalent even in cases where the technology creates large social value and saves lives. This article is a case study of such tragic technology resistance, focusing on tracking devices in cars which allow auto insurers to monitor how policyholders drive and adjust the premiums accordingly. Growing empirical work reveals that such “usage-based insurance” induces safer driving, reducing fatal accidents by almost one third, and resulting in more affordable and fair premiums. Yet, California prohibits this technology and other states limit its effectiveness, largely in the interest of privacy protection. The article evaluates the justifications fueling the restrictive regulation vis-à-vis the loss of lives resulting from this regulation. It concludes that the social benefits of the tracking technology dramatically outweigh the privacy and related costs.

Keywords: Insurance, Data, Privacy, Tracking, Auto Accident

JEL Classification: K12, K13, K23, D61, D63

Suggested Citation

Ben-Shahar, Omri, Privacy Protection, At What Cost? Exploring the Regulatory Resistance to Data Technology in Auto Insurance (June 20, 2023). Journal of Legal Analysis Vol. 15, 129-157 (2023), Available at SSRN: https://ssrn.com/abstract=4486471 or http://dx.doi.org/10.2139/ssrn.4486471

Omri Ben-Shahar (Contact Author)

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

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