http://www.bbc.co.uk/news/business-24941415

Denied benefits for smiling

On the danger of misinterpreting that data, here's a cautionary tale.

In 2009, while on leave from her technology job in Bromot, Quebec due to severe depression, Nathalie Blanchard went to the bank one day only to find out her health insurance benefits had been cut off.

The cause? A few Facebook photos in which she was smiling.

The insurance company "determined unilaterally that based upon what they saw on the site, they didn't think that she was disabled and they cut her off," says her lawyer, Thomas Lavin. The case later settled out of court.

How big data is changing the cost of insuranceDave Pratt winced when his teenage son bought himself a Jeep, thinking of how high the insurance would be on a young driver with a flashy car.

Continue reading the main story

But unlike most parents, Mr Pratt is at the forefront of the insurance industry's efforts to change the way car insurance is priced.

So Mr Pratt, who works for insurer Progressive, installed the company's Snapshot device in his son's car.

It's what's known in the business as a "telematic" device, which monitors the speed his son drives every second and what time of day he drives. The device also beeps three times when his son brakes too suddenly.

When his son accused him of trying to train him to be a better driver, Mr Platt agreed that was what he was trying to do.

Continue reading the main story“Start QuoteThe way we've done insurance now compared to what we can do is sloppy - most people are actually overpaying”

Mike FitzgeraldCelent

This, he says, is the future of car insurance: being able to monitor individual drivers to give them lower prices but also to make them better drivers.

"Now that we can observe directly how people drive, we think this will change the way insurance works," says Mr Platt, who adds that Progressive has more than a trillion seconds of driving data from 1.6 million customers.

"18 year old guys pay a lot for insurance, but some 18 year olds are really safe drivers and they deserve a better deal."

Sloppy businessCar insurance firms like Progressive in the US, to Tesco Bank in the UK and Generali Group in Italy, are currently in a race to convince consumers that letting them monitor their driving behaviour is actually a good thing.

This is because the technology, while not new, has only become affordable recently.

Also, consumers are just getting used to the idea of being tracking and having their data collected.