Why General Motors Dropped Its OnStar Smart Driver Program

Undisclosed data-sharing triggered insurance premium hikes for some customers.

Jim Koscs | 

Jul 2, 2024 | 5 min read

Cadillac

OnStar, the General Motors telematics service perhaps best known for connecting drivers to emergency response services after a crash, ended its free Smart Driver program in April 2024. GM had touted Smart Driver, which worked in conjunction with a smartphone app, as a tool to help drivers "maximize their vehicle's overall performance, reduce vehicle wear and tear and encourage safer driving."

The company cited customer feedback as a reason for the cancellation. That feedback, however, emerged amid some controversy after a New York Times article in March revealed that many OnStar customers had been hit with insurance premium hikes — or even policy cancellations. News that GM/OnStar had been selling drivers' data to brokers that served the insurance industry seemed to solve the mystery.

Less than two weeks after the New York Times' report, GM announced that it would stop sharing data with those providers. And with the end of Smart Driver, GM said it would un-enroll all customers from that program. Other OnStar services were unaffected.

Data Sharing Was a Natural Extension of Connected Cars

Other car companies, including Kia, Honda, Mitsubishi, and Subaru, continue to offer similar driver-safety tracking apps. Some share driver information with the same data brokers. This practice, made possible by today's widespread use of vehicle telematics technology, is common. Most car companies share or sell customers' driving data to third parties.

Data sharing is an outgrowth of the age of automotive telematics, which General Motors pioneered when OnStar debuted on some 1997 models. OnStar harnessed cellular wireless communication and GPS positioning to offer such conveniences such as remote vehicle diagnostics for roadside assistance, remote door unlocking, navigation guidance, and — in case of theft — vehicle tracking. OnStar later included automatic crash notification, which could direct emergency services to a stricken vehicle even if the driver did not know their location.

Telematics evolved into connected car technology, which most carmakers now offer to provide a range of safety, convenience, and entertainment features. The safety benefits can be significant. Notably, some voices in the auto safety, insurance, and medical fields have been pushing carmakers to make automatic crash-response notification standard — and free — in all new vehicles. In early 2024, GM announced that all of its 2025 Buick, Cadillac, Chevrolet, and GMC vehicles would do so.

The Data OnStar Smart Driver Shared

According to GM, enrolling in the Smart Driver program, which required downloading a smartphone app and agreeing to terms and conditions, was strictly up to the customer. Those who read the privacy statements for OnStar and OnStar's Application Services would learn that collected data could be shared with third parties.

Neither agreement, however, mentioned selling detailed driver information to LexisNexis and Verisk, two data brokers that serve the insurance industry. Insurers were particularly interested in identifying drivers' instances of "hard" acceleration and braking and speeds exceeding 80 mph.

Consumers who enroll in usage-based insurance (UBI) programs, also known as telematics insurance, agree to share that same data. Those programs offer drivers the possibility of earning lower rates for safe driving, though some companies say they also may raise rates for behavior they deem unsafe driving behavior.

Surprise! Your Car Insurance Premiums Went Up

Some customers driving GM vehicles with OnStar Smart Driver activated reported being surprised with higher premiums or cancellations from various insurance companies. Others who reported similar outcomes claimed they had never enrolled in Smart Driver.

A GM sales training manual showed one possible explanation for these seemingly unwitting enrollments. According to the manual, salespeople could earn bonuses for signing up OnStar customers.

The manual also stipulated that salespeople were required to put a customer-signed copy of OnStar's terms and conditions in the vehicle's sale packet, risking a charge-back for not complying.

GM had about 8 million of its OnStar customers enrolled in Smart Driver and earned an amount in the "low millions" each year from the program, according to the New York Times.

Use-Based Insurance Programs Offer the Promise of Lower Rates

Some OnStar Smart Driver users were receiving discounts from their insurance companies based on driving data that showed safe driving behavior. OnStar's website answering questions about the end of Smart Driver advised customers to contact their insurance carriers to inquire about available discounts, presumably through those companies' own UBI programs.

GM itself had been offering OnStar-branded auto insurance in Arizona, Texas, and Illinois. That became GM Insurance in January, two months before news about GM's data sharing broke.

In the months since the news about OnStar's privacy issues was reported, Hyundai dropped its Drive Score program. Other car companies that offer driver-coaching apps similar to Smart Driver, such as Kia's Driving Score, promise the possibility of insurance discounts and disclose their connection with Verisk and LexisNexis. Mitsubishi Road Assist+ also shares driving data with those companies.

Automotive Data Sharing Is Here to Stay

Automotive data is big business — and it's only getting bigger. By one estimate, the market for collected data was worth more than $2 billion in 2022 and will exceed $4 billion by 2026. That means drivers can reasonably expect more efforts by carmakers to earn money from the connected-car data they gather from customers

It's also likely that efforts to link automotive data to insurance will continue. In 2022, Ford filed a patent application for an integrated Insurance Management System that ties in with advanced driver-assistance systems, including such features as adaptive cruise control, forward-collision warning, and lane-keep assist. Presumably, then, if you change lanes without signaling, your insurance company could find out.

Jim Koscs

Jim Koscs has been writing about cars for more than 30 years, his byline appearing in national enthusiast and trade publications, newspapers, and websites. He covers a broad spectrum of topics in automotive business, culture, collecting, design, history, racing, and technology. The "car thing" goes way back for Jim. At the 1968 New York Auto Show, he snuck away from his father to get a better look at a Rolls-Royce... from underneath it, to see if it had dual exhausts. (It didn't.)