Texas attorney general Ken Paxton has filed a lawsuit against Allstate Corp. and its data analytics subsidiary Arity LLC, accusing the companies of unlawfully collecting, using, and selling the personal data of more than 45 million drivers across the United States.
The lawsuit claims that the companies secretly embedded software in mobile apps to gather trillions of miles of location and movement data. This data, according to the attorney general’s office, was used to form a comprehensive database of driving behavior, which was then used by Allstate and other insurers to justify premium increases.
Paxton stated that these actions violated the Texas Data Privacy and Security Act, which mandates clear notifications and consent from individuals before collecting or selling their sensitive information.
“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.”
In August, Paxton filed a similar lawsuit against General Motors for allegedly collecting and selling driver data to third parties, including insurance companies.
The state’s lawsuit seeks a court ruling that the practices were unlawful and demands that all collected data, including any held by third parties, be destroyed. Texas is also pursuing penalties, including at least $17,000 for each violation of the state’s insurance code and data privacy law, as well as up to $10,000 for violations related to data brokers.
Additionally, Texas is requesting full restitution for consumers affected by these alleged illegal data practices.
Allstate responded by denying the allegations. The company stated that Arity, its data analytics subsidiary, helps consumers obtain more accurate auto insurance pricing through a process that is both transparent and fully compliant with laws and regulations.
Arity, which was founded in 2016, operates as a separate entity from Allstate but remains closely linked to the insurer. Allstate had previously stated that Arity would serve as a “value creation company,” offering data services to other insurers and businesses.
The lawsuit has drawn attention to the growing use of telematics programs in the insurance industry, which use driving data to inform policies. Paul Tetrault, senior director of personal lines for the American Property Casualty Insurance Association, noted that while telematics can benefit consumers by providing feedback on their driving habits, these programs must rely on clear consent and transparency.
“These programs represent a valuable tool that provides drivers with immediate feedback on how they are driving, enabling them to take corrective action to become safer drivers and save on their auto insurance,” Tetrault said.
In Texas, Allstate ranks as the third-largest provider of private passenger auto insurance, with a market share of 10.66%, according to recent data from BestLink.
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