Texas attorney general sues Allstate and Arity
Texas Attorney General Ken Paxton has initiated legal action against Allstate Corp. and its data analytics subsidiary, Arity LLC, alleging that these entities have illegally collected, utilized, and sold the personal information of over 45 million drivers nationwide.
The lawsuit asserts that the companies covertly integrated software into mobile applications to collect trillions of miles of location and movement data. According to the attorney general’s office, this information was employed to create an extensive database of driving habits, which Allstate and other insurance providers subsequently used to rationalize increases in insurance premiums.
Paxton asserted that these actions contravened the Texas Data Privacy and Security Act, which requires explicit notifications and consent from individuals prior to the collection or sale of their sensitive information.
“Our investigation uncovered that Allstate and Arity disbursed millions of dollars to mobile applications for the installation of Allstate’s tracking software,” Paxton remarked. “The personal information of millions of Americans was sold to insurance firms without their awareness or consent, in violation of the law. Texans are entitled to better protection, and we will ensure that all these companies are held accountable.”
In August, Paxton initiated a comparable lawsuit against General Motors, accusing the company of unlawfully gathering and selling driver data to third parties, such as insurance firms.
The lawsuit filed by the state aims to obtain a judicial determination that these practices are illegal and calls for the destruction of all collected data, including that which is in the possession of third parties. Texas is also seeking penalties, which include a minimum of $17,000 for each breach of the state’s insurance code and data privacy regulations, as well as up to $10,000 for infractions involving data brokers.
Furthermore, Texas is demanding complete restitution for consumers who have been impacted by these purportedly unlawful data practices.
Arity, established in 2016, functions as an independent entity from Allstate while maintaining a close affiliation with the insurer. Allstate has previously indicated that Arity is intended to act as a “value creation company,” delivering data services to other insurance providers and businesses.
The lawsuit has highlighted the increasing implementation of telematics programs within the insurance sector, which utilize driving data to shape policy decisions. Paul Tetrault, senior director of personal lines for the American Property Casualty Insurance Association, emphasized that although telematics can offer advantages to consumers by providing insights into their driving behaviors, it is essential that these programs operate with explicit consent and transparency.
“These programs serve as a significant resource that offers drivers immediate feedback regarding their driving practices, allowing them to make adjustments to enhance their safety and reduce their auto insurance costs,” Tetrault stated.
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.
