Navigating Trust: Insurers' Data Collection and Customer Perceptions

Trust in Data Collection: A Crucial Gap

As the insurance industry increasingly leverages new data streams to refine products, a significant question arises: do customers actually consent to this data usage? A recent J.D. Power survey reveals that 55 percent of customers are uncomfortable with their insurance companies collecting 'alternate data,' which includes driving behavior and social media activity. This mistrust contrasts sharply with the 22 percent who trust their insurers to handle such data responsibly.

Evolving Comfort Levels with Data Sharing

Interestingly, customers are more at ease with sharing data they already disclose, such as utility and rent payment information. Thirty-nine percent are okay with this, and 45 percent are willing to share driving data. This suggests that as customers become accustomed to data sharing, their trust in insurers may grow. J.D. Power notes that customers are initially more comfortable with data they are familiar with, such as driving data used in telematics programs.

Balancing Data Use and Privacy Concerns

While customers may accept data collection for certain purposes like vehicle recovery and tailored coverage, they are less accommodating when it comes to marketing. Only 55 percent believe marketing is a reasonable use of their data. Additionally, 85 percent are concerned about privacy and security breaches, and 74 percent believe insurers should seek permission before collecting alternative data. This highlights the need for insurers to transparently communicate the value and secure handling of collected data.

In light of recent data privacy regulations and high-profile data breaches, insurers must prioritize customer trust. By demonstrating the tangible benefits of data collection and ensuring robust data security measures, insurers can gradually build and maintain customer trust. For customers, understanding the 'why' behind data collection can help in making informed decisions about their insurance policies.