FSCO publishes bulletin on usage-based insurance pricing, privacy considerations

The Financial Services Commission of Ontario has posted a bulletin outlining considerations for insurers planning to offer usage-based auto insurance programs, placing heavy emphasis on privacy issues and data collection.

 Information gathered through telematics technology, or other devices, for usage-based insurance pricing (UBIP), should be considered “personal information” as defined by Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA), according to the regulator.

That definition refers to “information about an identifiable individual,” but FSCO says data collected from multiple drivers (as in a family), would still be considered personal information in terms of usage-based pricing.

“At this point in time, UBIP programs, including program-provided devices and applications, should collect and use UBIP data solely for discount-setting purposes, and not to decline, cancel or refuse to renew risks or to confirm rating criteria currently uses (e.g., where vehicle is principally garaged, distance drive, pleasure/commute/business use),” the bulletin notes.

“Additionally, it would be inappropriate for insurers to use UBIP data for claims-related purposes at this time,” it adds.

Insurers would also be responsible for ensuring all consent documentation and collection of data meets the requirements of privacy legislation, including PIPEDA. UBI programs also must be voluntary, FSCO adds.

“Insurers should, where possible, facilitate divers using their personal UBIP data for the purposes of entering into a contract with another insurer including enrolling in another insurer’ UBIP program,” the bulletin also notes.

It adds that personal information and data should not be kept for “longer than is necessary and the insurer must demonstrate that it has a procedure for appropriately managing any personal information.”

In addition, companies may be required to provide FSCO with any advertising or promotional material around their UBI programs, to ensure the information is fair and not misleading, the bulletin says.