Alberta is about to adopt a new law that would make sweeping changes to the way automobile insurance works, but privacy advocates say a critical aspect of the legislation has so far slipped by with little public attention or scrutiny — the expansion of "usage-based insurance."
Among many other changes, Bill 41 would make it easier for insurance companies to monitor drivers' behaviour by collecting detailed data through devices embedded in their vehicles or software installed on their smartphones.
The implications of this are little known and poorly understood by many Canadians, says Privacy and Access Council of Canada president Sharon Polsky. She believes the Alberta legislation, which could pave the way for similar laws in other provinces, ought to be more fully considered before changes are made that will be hard to undo.
"This bill should be halted in its tracks," she said.
"The Government of Alberta and other governments across the country need to update the access and privacy legislation to meet current needs, to genuinely give us a right of privacy and to put us in control of our information."
Insurance companies, however, say the legislation is long overdue and would put Alberta more in line with practices that have been in place for years in the United States, allowing drivers to prove their safe behaviour through technological means and thereby save money on their insurance premiums.
Government says law will 'increase fairness'
United Conservative Party MLAs say the new law would create more options for consumers, especially those who want insurance products tailored to their driving needs.
"This is expected to increase fairness in the marketplace and further ensure that consumer costs adequately reflect individual risks and driving habits," Finance Minister Travis Toews said during second reading of Bill 41 in the legislature.
To that end, he said the new law "will allow greater ability for industry to provide innovative insurance options … and greater flexibility in applying usage-based insurance."
Ron Orr, the UCP MLA for Lacombe-Ponoka, said the legislation means "Alberta drivers will have more choice and control over their own insurance costs."
Polsky, however, says many people don't fully understand what they're signing up for when they agree to hand over so much data from their vehicles and smartphones to insurance companies, or where that data could ultimately end up.
She also worries the monitoring devices, while voluntary in theory, could be made effectively mandatory through pricing, if drivers who refuse to be tracked face exorbitant premiums.
Alberta 'the first' to go this route
Some insurance companies already offer discounts to drivers who are willing to allow themselves to be monitored. But so far they are not allowed to sell usage-based insurance in other ways.
The new law will allow usage-based insurance "however insurers wish to use it, so long as they can meet the regulatory requirements," said Celyeste Power with the Insurance Bureau of Canada.
"Alberta was the first to announce full use of usage-based insurance," she said.
"And just afterward, Ontario announced that they were sort of getting rid of restrictions around it, as well. In other jurisdictions, it's not available for use in that kind of broad way."
She believes the new law presents an "opportunity for some really cool ideas and cool technology to come to Alberta."
For example, she says drivers could opt for a pay-per-kilometre insurance option, where they would have a "way lower" base premium and then pay incrementally for the amount they actually drive.
That option, she says, would be especially appealing to younger people who don't drive a lot but drive responsibly.
Currently, young drivers face higher premiums as a group, due to the fact that their age demographic is considered to be higher risk by the actuaries who set insurance rates. Power says usage-based insurance is a fairer way to set individual rates.
How the tracking works
If you agree to the tracking, your driving habits would be monitored either through a device installed in your vehicle or software that uses the GPS, accelerometer and other bits of hardware built in to your smartphone.
Power says different companies would track you in different ways, but basically they would keep an eye on things like how fast you drive, how quickly you accelerate, how hard you brake, how often you drive, what time of day you drive, where you drive, and so on.
Less driving and better driving behaviour would be rewarded with lower premiums. More driving and unsafe behaviour would be punished with increased costs.
She says most companies offer an online dashboard so you can track your own driving data, and even push notifications if you're racking up too many charges, similar to data-overage warnings on your cellphone.
In the United States, she says, usage-based insurance has been correlated with safer roads, as it makes drivers more aware of their habits and provides a financial incentive to drive safely — or drive less.
But, she says, it's not a product for everyone.
"If you don't feel you're a good driver or you're speeding too much down the (Highway) 2 between Calgary and Edmonton, usage-based insurance is not for you," Power said.
It also takes some getting used to.
"If you think you're an amazing driver and the technology is telling you you're not, yeah, you might be a little bit resistant to it," Power said.
"I think it just depends on the person."
Data use, privacy and regulation
Power says the use of personal data would be directly regulated by Alberta's Automobile Insurance Rate Board (AIRB) and be subject to oversight from the privacy commissioner.
But Polsky, with the Privacy and Access Council of Canada, says most people don't understand just how much information is being harvested by these types of monitoring devices. She says some smartphone apps that insurance companies use to track drivers in other jurisdictions require users to keep them running 24 hours a day, even when they sleep.
"They want all of it monitored so that we can enjoy more affordable rates based on relinquishing our privacy?" she said. "That is a very, very high price to pay."
She also believes privacy laws, both in Alberta and nationwide, are outdated or lack the regulatory teeth to deal with international companies that collect data in Canada but store it in other countries.
Alberta's Opposition NDP has also criticized the legislation, saying it gives too much power to the AIRB, which they say is too close with the government and the insurance industry.
Numerous people on the AIRB board of directors either work in or previously worked in insurance, and the NDP have also pointed out that Jason Kenney's former chief of staff is now a registered lobbyist on behalf of the insurance industry, among other clients.
"Bill 41 is giving the industry more control, giving the lobbyists more control," Edmonton-South West NDP MLA Thomas Dang said during second reading of the legislation.
The bill has passed second reading and is at the committee of the whole stage in the legislature, where MLAs can propose and vote on amendments. Additional debate was scheduled for Wednesday evening.
It still needs to pass third and final reading to ultimately become law.
If that happens, Polsky says, other provinces will likely look at similar laws.
"We are now living in a monkey-see, monkey-do political era and the danger is if it's good enough for one jurisdiction, well it must be good enough for another jurisdiction," she said.
"So if this is allowed to become 'mandatorily voluntary' in Alberta, it's just a matter of time before it proliferates across the country, at our peril. So it's up to us to understand what's at stake and voice our views to our elected representatives."
Power, meanwhile, believes Alberta is leading the way in modernizing Canada's insurance-regulatory system, which she says has lagged behind the United States, where some form of usage-based insurance has been around for the past decade.
She also says concerns over privacy and price hikes for people who don't agree to be monitored are overblown.
"We haven't seen any examples in the U.S. or any other jurisdictions around the world where the usage-based insurance product essentially became almost mandatory just by the way it's priced," Power said.
"It is sort of funny when you think about it," she added. "People are like, 'I don't want something tracking my movement or tracking this or that.' And yet, we carry around our phones all the time and they're tracking absolutely everything we do.
"So it's kind of getting to a world now where everything is being tracked, anyway."
She later added, by email: "Alberta's insurers take the privacy of their customers very seriously and recognize the importance of ensuring personal information remains just that, personal."