Can privacy concerns for insurance of connected cars be compensated?
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RESEARCH PAPER
Can privacy concerns for insurance of connected cars be compensated? Sebastian Derikx 1 & Mark de Reuver 1 & Maarten Kroesen 1
Received: 23 July 2015 / Accepted: 11 December 2015 / Published online: 30 December 2015 # The Author(s) 2015. This article is published with open access at Springerlink.com
Abstract Internet-of-things technologies enable service providers such as insurance companies to collect vast amounts of privacy-sensitive data on car drivers. This paper studies whether and how privacy concerns of car owners can be compensated by offering monetary benefits. We study the case of usage based car insurance services for which the insurance fee is adapted to measured mileage and driving behaviour. A conjoint experiment shows that consumers prefer their current insurance products to usage based car insurance. However, when offered a minor financial compensation, they are willing to give up their privacy to car insurers. Consumers find privacy of behaviour and action more valuable than privacy of location and space. The study is a first to compare different forms of privacy in the acceptance of connected car services. Hereby, we contribute to more fine-grained understanding of privacy concerns in the acceptance of digital services, which will become more important in the upcoming Internet-ofthings era.
Keywords Privacy . Mobile services . Insurance . Internet-of-things . Connected cars . E-mobility
JEL classification L86
Responsible Editor: Hans-Dieter Zimmermann * Mark de Reuver [email protected] 1
Delft University of Technology, Jaffalaan 5, 2628 BX Delft, The Netherlands
Introduction As mobile and sensor technologies are becoming omnipresent, the vision of connected cars is unfolding (Fleisch et al. 2014; Gerla et al. 2014). By connecting cars to the Internet, vast amounts of data can be collected on mileage and driving behaviour (Paefgen et al. 2012). Service providers can utilize such data to offer value-added services like traffic safety, vehicle diagnostics, preventive maintenance and advanced real time navigation (Leminen et al. 2012). Connected cars also enable actors in the car industry to engage new methods for customer relationship management, (proximity) marketing and after-sales services (Tenghong et al. 2012). However, collecting vast amounts of data from connected cars creates privacy and ethical hazards. In general, privacy concerns negatively affect the intention to use digital services (Malhotra et al. 2004; Miyazaki and Fernandez 2001). Service providers can compensate privacy concerns by offering convenience or monetary rewards as has been shown for ecommerce services (Hann et al. 2007; Laudon 1996; Li et al. 2010). However, sensitivity of disclosed personal data will be substantially higher for connected car services than traditional electronic services as highly detailed habits and mobility patterns can be inferred. Since sensitivity of disclosed personal data has a significant positive effect on related privacy concerns (Bansal and Gefen 2010), the question a
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