Texas Sues Allstate for Allegedly Tracking People To Raise Insurance Prices

The state of Texas has filed a lawsuit against insurance giant Allstate, accusing the company of using invasive tracking methods to collect personal data and hike car insurance rates.

Newsweek has contacted Allstate for comment via email.

Why It Matters

The allegations raise questions about privacy, data usage, and consumer protection in the insurance industry.

The sector has been under fire recently after some firms withdrew home cover in high-risk areas before the Los Angeles wildfires, in which tens of thousands of people have lost their homes. The murder of health insurance CEO Brian Thompson also prompted discussions nationwide over health care costs and insurance practices.

What To Know

Texas Attorney General Ken Paxton alleges that Allstate has been “illegally” gathering data through mobile applications, including Life360, a location-sharing platform.

Newsweek has contacted Life360 for comment via email.

According to the lawsuit, Allstate and its subsidiary, analytics company, Arity, which was founded by Allstate in 2016, have collected trillions of miles worth of location data from over 45 million customers in an effort to build the “world’s largest driving behavior database,” which was then used by third party insurers to justify increasing car insurance premiums.

Allstate told Newsweek: “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.”

“If a consumer requested a car insurance quote or had to renew their coverage, insurers would access that consumer’s driving behavior in Defendants’ database. Insurers then used that consumer’s data to justify increasing their car insurance premiums, denying them coverage, or dropping them from coverage,” Paxton’s office alleges.

Allstate and Arity were allegedly able to build the database by paying third-party app developers—including Life360, GasBuddy, Fuel Rewards and Routely—millions of dollars to incorporate their tracking software into existing mobile phone applications.

Newsweek has also contacted GasBuddy, Fuel Rewards and Routely for comment via email.

It comes after The New York Times revealed in July how such data is used to calculate a “driver score” for a consumer, which can determine their insurance rates while exposing them to unexpected tracking.

“Once Defendants’ software was downloaded onto a consumer’s device, Defendants could monitor the consumer’s location and movement in real-time,” the suit says.

Paxton also accused Allstate of violating the state’s Data Privacy and Security Act by never providing notice or obtaining Texans’ consent to collect or sell their sensitive data.

“Allstate never provided notice or obtained Texans’ consent to collect or sell their sensitive data,” Paxton’s office added. “This is the first enforcement action ever filed by a State Attorney General to enforce a comprehensive data privacy law.”

What People Are Saying

Texas Attorney General Ken Paxton said on X: “Today I sued Allstate and its subsidiary, Arity, for unlawfully collecting, using, and selling data about the location and movement of Texans’ cellphones through secretly embedded software in mobile apps.

“Texans deserve better, and we will hold all these companies accountable.”

Allstate said in a statement to Insurance Journal: “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.”

What Happens Next

Allstate is yet to formally respond to the lawsuit.