Australia’s aging and ill-equipped privacy law and its slow revision are increasing the risk that sensitive personal data generated by a smartwatch will be misused by commercial interests. Without the protection of strict privacy rules comparable to the European Union’s General Data Protection Regulation or even New Zealand’s recently updated Privacy Act, the privacy challenges posed by the use of personal data are unlikely to be resolved. by companies.
privacy risks
Whether it’s a mobile phone app linked to your car that monitors your driving efficiency, or a health insurance wellness app linked to your smartwatch, the increase in data collection and a possible move toward aggregation of that data is happening rapidly.
However, the privacy risks associated with the flow of data from wearable technology to insurers do not typically attract much media attention; neither does the question of whether consumers who download apps or link devices to insurers are in a position to offer informed consent.
However, regulators and researchers seem aware of the privacy risks posed by this type of data flow. The Australian Competition and Consumer Commission (ACCC), which appears to be increasingly alert to privacy issues, has sounded the alarm over the possibility of Big Tech trying to monetize collected health and fitness data sets and compiled through smart devices.
In late 2019, days after Google announced its $2.1 billion ($3 billion) global acquisition of smartwatch maker Fitbit, then-ACCC Chairman Rod Sims said any guarantees Google made of not selling the Fitbit data was essentially useless. The package deal was closed in January, despite the fact that the ACCC was conducting an investigation of compliance with the agreement. That investigation, which takes into account both competition and consumer considerations, is ongoing.
exercise discounts
Australian insurers AIA and NIB, as well as airlines such as Qantas Run wellness apps that offer rewards for users in various forms. Life and health insurer AIA describes its AIA Vitality app as “a science-backed, personalized health and wellness program that […] It encourages you to move more, eat right and get regular health checks.”
The app, available to people with AIA Health and AIA Life Insurance policies, is linked to a compatible smart device. Users progress through a rewards program, allowing them to earn a 20 percent discount on their premium.
Bypassing regulatory restrictions, these rewards are crucial. Australian health insurers are governed by a community rating system, which means that regardless of health status, age, gender or any other factor, individuals will be charged the same premium as any other member who Live within your state.
However, they may offer a discount if they know you exercise more or eat well. But the regulatory framework means that the opposite behavior (someone who moves less and has an unhealthy diet) cannot lead to policy increases or even a policy denial.
Indirect price effects: Moving and living a healthy lifestyle can earn you discounts from your insurer.
In response to our written questions, NIB Executive Director for Australian Residents Health Insurance Ed Close emphasized that the insurer’s app was offered “at no additional cost” to users.
“When an NIB member uses our ‘Well with NIB’ app, we may collect personal information to send communications to our members that contain personalized health information, products and services,” Close said.
“We may also use a member’s personal information to identify areas where they may benefit from one of our health management programs,” he said, adding that it was up to the member to decide whether to participate. Additionally, members can request that their personal information be deleted from the app if they decide to stop using it, NIB said.
The insurer insisted that this information was not being used to price a product, but simply to personalize customer offers.
However, the line between price and customization blurs when a lifestyle-friendly policy brings with it the benefit of a future discount. Even if these discounts benefit the consumer, they establish a link between health data and prices. After all, a discount equals a change in price.
“We have no way of knowing how insurance prices work because companies keep it completely secret.”
Sofia Bednarz, University of Sydney
Data generated by portable devices offers insurers a great advantage. Not only can they get to know their customers better, but they can also adjust the algorithms to profile people in a more granular way. It is unclear how those profiles will be used in the future.
Industry observers agree that Australian insurers are already racing to find the cheapest customers – that is, policyholders who are least likely to get sick and cost insurers. Wearable technology accelerates that race, putting those with the most data at a competitive advantage.
Katharine Kemp, a law professor at the University of New South Wales, says there is “the potential here for insurers to discriminate and even exclude [based on] health indicators or activity levels that are capturing from the device”.
‘intense surveillance’
And in the longer term, says Kemp, a company could apply data to artificial intelligence and make “inferences and predictions about the future health of the consumer; possibilities and probabilities that the consumer himself does not know [that] could be used against the consumer.”
“Some discrimination or exclusion will be difficult to uncover because the company will be using targeted advertising, and may simply decide not to show its ads and online offers to ‘undesirable’ consumers,” Kemp said. “If you move to this intense surveillance, monitoring and general data collection, you move towards selective targeting and discrimination,” he added.
With opaque privacy agreements and statements, any consent a consumer gives to hand over data generated by a smartwatch is likely ill-advised, it finds.
“It’s completely untrue to say that consumers are consenting to something when they don’t understand it and you have to consent to a bunch of vague additional purposes when you only want to consent to what is necessary to buy the product,” says Kemp.
Charging
The problem of personal data flowing from policyholder to insurer goes beyond wearable watches and the insurance industries, according to research published this month.
Zofia Bednarz, Professor of Business Law at the University of Sydney, has looked at the data collection as part of a larger research project looking at insurance law and anti-discrimination. In an interview, Ella Bednarz pointed to loyalty programs from companies that also offer insurance products, such as Qantas and supermarket owner Coles. Both companies offer loyalty programs, as well as products such as home, health and pet insurance.
Bednarz analyzed the privacy policies in place about a year ago and said their wording meant companies could be switching and exchanging data between loyalty schemes and insurance products. “We have no way of knowing how insurance prices work because the companies keep it a complete secret,” he said.
What is clear is that insurers show no signs of slowing down in their pursuit of data, and regulatory ambiguity underscores the urgency of updating Australia’s Privacy Act 1988. Progress on the review has been slow, something the Chairman of the Australian Privacy Foundation, David Vaile, has dismissed the use of data by insurance companies as both a ticking time bomb and a “honey bomb”.
“It’s so rich and so attractive that even if it’s not being abused right now, it attracts seemingly straight operators and hustlers.” [alike]Vale said.
Laurel Henning reports on regulatory affairs for LexisNexis’ MLex.
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