As far as the future of car insurance goes, all signs point to telematics: i.e., rates determined by a device that tracks metrics such as how fast you drive, how hard you brake, and when you're out and about. If your driving habits are deemed safe, you'll get discounted coverage.
Sounds great, unless you're concerned about privacy. Although many telematics programs state they don't collect locations of vehicles—indeed, most "trackers" aren't even equipped with GPS—Rutgers researchers have found that a driver could reveal her route to a car insurance company with no more information than her home address and the speed she's traveling.
The researchers developed an algorithm that matches speed patterns to an area's street layouts, in order to approximate route and destination. Phys.org provides a helpful explanation of how this works, using the example of someone who lives at the end of a cul-de-sac, a quarter mile from an intersection:
The driver's speed data would show a minute of driving at up to 30 miles per hour to reach that intersection. Then if a left turn leads the driver to a boulevard or expressway but a right turn leads to a narrow road with frequent traffic lights or stop signs, you could deduce which way the driver turned if the next batch of speed data showed a long stretch of fast driving or a slow stretch of stop-and-go driving.
Thereby determining the car's location throughout a given trip. Though this technique isn't as exact as GPS coordinates, the researchers found that 26 percent of the time, "elastic pathing" predicted a driver's final destination within about one-third of a mile. Roughly another 14 percent of the time, the method was accurate within two-thirds of a mile.
The times the test didn't perform as well were often when a test drive had a lot of traffic, as well as random stopping and maneuvering. These factors affected speed data and therefore the algorithm's results. But, the researchers write, since many drivers travel the same routes over and over again, enough speed data could easily be collected about those routes to more accurately determine where exactly they're going.
The real question is, are insurance companies tracking us when they say they aren't? The researchers aren't making that claim, but rather proving it would be relatively simple to obtain route information if, say, law enforcement subpoenaed someone's driving records. So insurance companies that state their basic telematics packages don't track exact locations—like Allstate's Drivewise and State Farm's In-Drive—should be more upfront in their privacy policies.
What about companies who are openly tracking route data? An FAQ for Progressive’s Snapshot states that "some Snapshot devices record your location —this is only for research purposes." A Progressive customer service agent told me by phone that this is a "new pilot program," where one out of every five Snapshot devices distributed to customers who sign up online comes equipped with GPS. There's no way for customers to know which kind of device they're going to receive, she said.
As for exactly what sort of research the company is conducting, a Progressive spokesperson has yet to return my call. Update, 4:05 PM: Jeff Sibel of Progressive's Public Relations department says that Progressive started collecting GPS-based location data last spring, and that it might be used for "value-added services" in future models of Snapshot. "If someone's driving to work on the highway, compared to on the street, there might be a correlation between what's less risky," he said by phone. He also stressed that this information was not being used to determine rates, and that current Snapshot customers can call Progressive to check whether their device has GPS or not.
This certainly isn't the only way companies might be tracking your location, particularly if you have a smartphone. But it's yet another variation of the ongoing debate of privacy versus convenience in the so-called "big data" era. As OKCupid founder Christian Rudder recently said of his own website's data collection and research, "If you use the Internet, you're the subject of hundreds of experiments at any given time, on every site. That’s how websites work."
And, apparently, car insurance—elastic pathing or no.