Texas AG Ken Paxton sues Allstate over collection of driver data

Texas Attorney General Ken Paxton claims that Allstate is unlawfully collecting, using and selling data about the location and movement of consumers through secretly embedded software in mobile apps.

Paxton is suing Allstate and its subsidiary, Arity, for harvesting the data through apps such as Life360. Allstate and other insurers then used the covertly obtained data to justify raising Texans’ insurance rates, Paxton alleged.

Allstate Corp. sent a statement to InsuranceNewsNet: "Arity helps consumers get the most accurate auto insurance price after they consent in a simple and transparent way that fully complies with all laws and regulations.”

Paxton alleges that Arity pays app developers to incorporate its software to track consumers’ driving data. Allstate collected trillions of miles worth of location data from over 45 million consumers nationwide and used the data to create the “world’s largest driving behavior database,” the AG's office said in a news release.

When a consumer requested a quote or renewed their coverage, Allstate and other insurers would use that consumer’s data to justify increasing their car insurance premium, the lawsuit claims.

These actions violate the Texas Data Privacy and Security Act, Paxton said, which created heightened protections for Texans’ sensitive data, including but not limited to precise geolocation information. The law requires clear notice and informed consent regarding how a company will use Texans’ sensitive data.

Regulators across the country have been paying closer attention to insurers' use of consumer data since the growth of artificial intelligence and machine learning.

Allstate never provided notice or obtained Texans’ consent to collect or sell their sensitive data, the lawsuit noted. This is the first enforcement action ever filed by a state attorney general to enforce a comprehensive data privacy law, the Texas AG's office said.

“Our investigation revealed that Allstate and Arity paid mobile apps millions of dollars to install Allstate’s tracking software,” Paxton said. “The personal data of millions of Americans was sold to insurance companies without their knowledge or consent in violation of the law. Texans deserve better and we will hold all these companies accountable.”

This lawsuit follows Paxton’s lawsuit against General Motors and his ongoing investigations into several car manufacturers for secretly collecting and selling drivers’ highly detailed driving data.

This report compiled by InsuranceNewsNet staff.