Insurance used to work in two simple steps. You paid a premium based on broad categories, your age, your driving record, your zip code. Then if something happened, a person reviewed your claim and decided what the company owed you. Both of those steps now run through algorithms that most policyholders never see, never consented to in any meaningful way, and can’t meaningfully appeal. One decides what you pay. The other decides what you get back when you need it. Texas is already in the middle of the biggest legal fight over the first one.
What’s happening to your premium
Telematics programs, the “safe driver” apps and plug-in devices that promise a discount for good driving, track your speed, braking, cornering, phone use, trip timing, and often your precise location. More than 21 million U.S. drivers are already enrolled. The pitch is straightforward: drive safely, save money. The reality is messier. A 2025 Maryland Insurance Administration review of enrolled policies found about 24 percent of drivers actually saw a rate increase at renewal after enrolling, not a discount, with only about 31 percent seeing a decrease and the rest seeing no change at all.
The bigger issue isn’t the app you knowingly installed. It’s the car itself. Texas Attorney General Ken Paxton sued Allstate and its data analytics subsidiary, Arity, in January 2025, alleging they secretly embedded tracking software inside popular third-party apps, including the family-locator app Life360, to collect location and driving data from more than 45 million Americans who never signed up for any insurance telematics program at all. The suit alleges Allstate then sold those driving profiles to other insurance companies, who used the data to raise rates on people who had no idea they were being scored in the first place. It was the first enforcement action under Texas’s own Data Privacy and Security Act.
Automakers have their own version of this. The FTC finalized a consent order against GM and OnStar in January 2026 after finding the company used a misleading enrollment process and shared driving and location data with insurance-adjacent data brokers without clearly telling customers what they’d agreed to. The order bans GM from sharing that data with consumer reporting agencies for five years and requires real, informed consent going forward, plus giving customers the ability to review and delete what’s already been collected.
What’s happening to your claim
The other end of the process has its own algorithm problem, and the stakes are considerably higher than a rate increase.
UnitedHealthcare faces an active federal lawsuit over an AI system called nH Predict, used through its NaviHealth subsidiary to decide how much rehabilitation and post-acute care Medicare Advantage patients get after events like a stroke or surgery. The families bringing the suit, on behalf of two now-deceased patients, allege the model carries roughly a 90 percent error rate, and that UnitedHealth pressured staff to keep patient stays within 1 percent of what the algorithm predicted regardless of what a treating doctor recommended. After the algorithm went into wider use, the company’s overall denial rate on these claims jumped from 10.9 percent to 22.7 percent. A federal judge dismissed several counts on Medicare preemption grounds in February 2025 but let the core breach-of-contract claims move forward, a ruling other similar cases are now leaning on.
Cigna faces a parallel case over a system called PxDx. According to reporting cited in the lawsuit, Cigna doctors using the system denied more than 300,000 payment requests over a two-month period in 2022, spending an average of 1.2 seconds reviewing each claim before rejecting it. Cigna has said the process is a sorting tool, not AI or machine learning, and that the large majority of claims it touches get automatically approved rather than denied. Humana faces a similar suit in Kentucky over the same nH Predict technology.
The appeal numbers are the part that should give anyone pause. Multiple sources tracking these cases report reversal rates above 80 to 90 percent when patients actually appeal an algorithmic denial, meaning the original decision was wrong the large majority of the time it gets checked. But federal data cited in one of the lawsuits shows fewer than 0.2 percent of denied patients ever file that appeal. Most people don’t know they can, don’t have the energy to fight a denial while they’re sick, or don’t find out the process exists until it’s too late to matter.
The common thread
Both sides of this run on the same basic logic. A model trained on aggregate patterns makes a decision about an individual person, with no real transparency into how it weighed anything, and very little practical way for that person to contest it. On the premium side, that means being scored and charged more based on driving data you never agreed to share. On the claims side, it means having your actual medical need overridden by a prediction about what your recovery should look like on average.
Insurers describe both systems as guides or tools, not final decisions, human reviewers are supposedly still involved somewhere in the loop. The lawsuits describe something closer to rubber-stamping, humans present in name but not meaningfully reviewing anything an algorithm already decided.
What you can actually do
Know that turning off your car’s app doesn’t turn off your car. Most connected-car systems have a data or privacy section in the companion app where you can disable app-level sharing, but that doesn’t touch the vehicle itself. Newer cars have a built-in telematics control unit with its own cellular connection straight to the manufacturer’s servers, transmitting location and driving data independent of your phone, and it keeps running whether the app is installed or not. This is exactly what forced the GM/OnStar settlement, the FTC’s order specifically required GM to build customers a real way to disable geolocation collection at the vehicle level, because that option effectively didn’t exist before. If you want that level of control, ask your dealer or manufacturer directly whether the vehicle’s cellular modem can be deactivated. On many models, that’s a physical or service-level request, not a settings toggle you can find yourself. One thing that genuinely cannot be turned off on any modern vehicle, regardless of brand: the event data recorder, the crash “black box,” which is a federally mandated safety standard, separate from telematics entirely.
If you’re enrolled in a telematics program, ask your insurer directly, in writing, what specific data it collects, who it’s shared with, and whether it can be used to raise your rate as well as lower it. Several states, including New York and Maryland, now require insurers to disclose this on request, and getting the answer in writing gives you something to point to if your rate jumps without explanation.
If a health insurance claim gets denied, ask directly whether the denial involved an algorithm or automated review, and ask for the specific medical reasoning behind it, not just a form letter. You have the right to appeal, and the numbers above make clear that appealing has real odds of working. Don’t let the first no be the last word, especially given how rarely these systems get checked.