A decade ago, telematics devices revolutionized a significant portion of the auto insurance industry. Today, the usage-based insurance model is coming to homeowners policies, and raising serious questions about privacy along the way.
In the past year, four leading home insurance companies — American Family Insurance, Liberty Mutual, State Farm and USAA — have announced deals with companies that provide "smart" products for homes. These devices monitor and control certain of the home's major appliances and in exchange for using them, policyholders receive a discount on their premium. The insurance companies then receive a large amount of data on how their customers live.
"These are double-edged products," Bob Hunter, insurance director for the Consumer Federation of America and a former Texas insurance commissioner, told the Chicago Tribune. "If properly controlled for privacy and only installed with the policyholder's permission and total transparency, they can make a home safer and reduce the likelihood of death and destruction, but without strict protections, these could be a threat to a family's privacy and intimacy."
Such is the access these devices have that Canary, one of State Farm's partners, once recorded a baby's first steps. This is no small worry to consumer advocates concerned over privacy.