Jessica Edmondson Director of Media Outreach | Insurify
Texas Attorney General Ken Paxton has initiated legal action against Allstate and its data analytics subsidiary, Arity. The lawsuit claims the companies violated Texas's data and privacy security laws by unlawfully collecting driver data from over 45 million Americans.
According to the suit, Allstate allegedly created a database to aid its underwriting process and sold this information to third parties, including other insurance firms. Additionally, it accuses Allstate of purchasing driver data from several car manufacturers such as Toyota, Lexus, Mazda, Chrysler, Dodge, Fiat, Jeep, Maserati, and Ram.
The allegations extend to claims that Allstate and Arity incentivized app developers to embed Arity’s tracking software into their applications. This software purportedly recorded data every 15 seconds. In response to these allegations, Allstate has denied any wrongdoing. They argue that Arity’s data collection is intended to help consumers obtain more accurate insurance pricing.
Insurance companies have long used driving data for rate setting. As Buddy Parkhurst from Insurify explains: “Insurers use an insurance history report showing your prior insurance history, a motor vehicle report from the DMV that shows reported police tickets and accidents, and a CLUE report from LexisNexis which shows claims activity.” Drivers can voluntarily participate in telematics programs aimed at potentially reducing rates through good driving behavior.
However, Paxton's lawsuit challenges the collection of driving data from individuals not enrolled in tracking programs. It asserts that drivers did not consent to or were unaware of such tracking by Allstate and Arity. The collected data reportedly includes sensitive details like geolocation coordinates and speed metrics.
Furthermore, the lawsuit alleges that Allstate utilized this harvested information to increase premiums or deny coverage unjustly. Texas auto insurance rates saw a significant rise of 23% in 2024 with an average annual cost reaching $2,915 for full coverage according to Insurify's auto report.
This legal action follows a New York Times investigation revealing similar practices by Arity last year. Reports indicated that apps like Life360 shared user data with Arity for creating "driving scores," potentially impacting insurance rates adversely based on these scores.
A separate class-action suit also emerged last year accusing LexisNexis and General Motors of illicitly using OnStar program subscriptions for unauthorized tracking and selling this information.
In his lawsuit against Allstate, Paxton seeks multiple fines along with $100 per day per violation. He demands the permanent deletion of improperly collected data and restitution for affected consumers. A jury trial has been requested for this case.
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