The Future of Identity in the Information Society, an EU funded group, has published a recent report highlighting the issues around how much information a mobile phone company can obtain about you. Many of us would be surprised to learn that the latest generation of mobile phones incorporate tracking systems which could be used to tell exactly where you are.
The UN predicted that by the end of 2008, there would be four billion mobile phone subscribers in the world out of a total estimated population of 6.7 billion people on the planet.
Mobile phone subscriptions in the UK are now running at about 70 million connections out of a population of approximately 60 million meaning, unsurprisingly, that many of us have more than one mobile phone. With this level of mobile phone penetration in the country, and indeed the world, the data that could be collected from them would be extremely valuable.
There are many potentially very useful applications for mobile phone tracking data, for example, it could be used to tell you where the nearest petrol station is or where to find the nearest branch of your favourite shop.
However, phone tracking could also provide information which insurers would find very interesting. Imagine that you are applying for life insurance and declare that you only consume two alcohol units a week. A problem would arise if your insurers found out via your mobile phone that you spend the majority of your time in the pub!
A lot of lifestyle information which would be very useful for marketers could also be adopted by insurers to check on whether their policyholders or potential policyholders were telling the truth.
From a legal perspective it would be interesting to know whether this mobile phone evidence could be successfully used to reject claims as well as filter out applicants who presented an un-acceptable risk before a policy was even issued.
No doubt there are strategic thinkers in insurance companies who are already contemplating how best to use the information on us all that is becoming more collectable, in order to improve shareholder return and more accurately weight premiums.
Some members of the public may consider that an insurer having more access to information on our lifestyles is a bad thing and would lead to discrimination against those people who are perceived to be a bad risk.
On the other hand it may prove to be a weapon in the fight against fraud and present the opportunity to lower premiums for policyholders who can be more accurately assessed as presenting a lower risk.
Attempts to link policyholder behaviour to premium levels, such as Aviva’s ‘Pay As You Go’ motor insurance have not proved particularly successful in the past. This may be because people are reluctant to opt into a system which tracks them and also have technology, such as trackers, attached to their vehicles. However, if we are all going to be tracked anyway by using mobile phone technology which we all carry, some of those objections may disappear.
Many more insureds may be happy with the concept of lower premiums rewarding them for low risk behaviour if they know that it is simply an adjunct of an everyday activity like carrying a mobile phone.
Andrew Welch, head of insurance at North West law firm Stephensons Solicitors LLP, said “One of the issues with these potential new uses of mobile phone technology is the extent to which the user consents. It is difficult to see, how under the current legislation, a mobile phone could be used to track someone if they don’t consent to that, outside matters of national security such as anti-terrorism.
“However, it may in the future become a normal part of mobile telephone contracts that they contain a clause asking us to consent to their use for tracking and other purposes. Lets face it, many people do not read the small print on such contracts, so obtaining consent may not be a big problem for the mobile phone industry.”
This issue is another example of the potential conflicts that a more inter-connected world raises. The technology may present the opportunity for many of us to pay lower insurance costs, but are we prepared to sacrifice our privacy for that benefit?