The Power of Consumer-Permissioned Data in a Privacy-Conscious World

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Over the past several decades, digitization has shaped our world in many ways. While this has brought on benefits like increased connection and productivity, it also comes with its share of drawbacks.

One downside that’s getting increased attention is the fall of consumer privacy. According to the Internet Society, 75% of people distrust the way data is shared. And you can’t blame them, with the number of cyberattack victims rising to 343 million in 2023.

This unrest has sparked a trend of consumer-permissioned data, a practice that gives end users more control over who can access their personal information. In turn, companies adopting this technology are seeing a variety of business benefits, including improvements in trust, revenue, and compliance.

What Is Consumer-Permissioned Data?

Consumer-permissioned data (CPD) is a method of data sharing in which the individual consensually provides their data for a specific purpose. This process is already baked into several industries that focus on consumer privacy, such as medical institutions and credit bureaus.

For instance, when seeking care with a new medical provider, a patient needs to contact their previous doctor with a signed letter asking them to send over their records. Once they have proper authorization, the provider will be able to access patient data for the express purpose of fulfilling their medical needs. The patient needs to act as a middleman in this exchange, getting visibility into what the organization can see.

However, in industries in which consumer consent isn’t required by law, many businesses turn to alternatives like data warehouses to collect information on their own. While on one hand, it means that businesses can access data more quickly and with less friction, it also means the customer may be left in the dark about how their own data is being used. Not only can this foster a sense of mistrust with your customers, but it can also lead to less accurate information. 

Enabling customers to retain control of their data is becoming increasingly popular across a variety of industries. Solutions to facilitate this process digitally are on the rise, such as the financial services provider Plaid. With Plaid, consumers can provide financial applications with access to their banking data without exposing their credentials.

Instead of directly linking their bank account to every financial app they use, they can log in through an intermediary to surface the data they need. This allows the application to use their information without compromising sensitive login data. At the same time, because it creates its own link between systems, it can provide access just as quickly as it would if the consumer provided credentials directly– sometimes even faster.

Why Consumer Consent Is on the Rise Across Data Sharing

The idea of consumer-permissioned data isn’t exactly new, but it is rising in popularity as individuals want to know how their information is being used. From concerns over criminal breaches to discomfort with hyper-targeting, many are becoming increasingly protective over their data. On the flip side, consumer-permissioned data also provides a lot of benefits to businesses.

Better data

One major advantage of CPD is that it offers better data quality. Whereas third-party data is subject to manual error and going out of date, consumers typically provide the most recent information– often directly from the source. This enables better decision-making on the business side. Especially in scenarios that rely on accurate data, such as placing CPI on uninsured drivers, this can become an issue of regulatory compliance.

Consumer trust

In addition to more reliable data, adopting a consumer-permissioned approach can significantly enhance trust between businesses and their customers. Concerns over privacy are on the rise. According to a study by Pew Research Center, 81% of Americans feel they have very little or no control over the data companies collect.

With CPD, you can share openly with your customers what data is being collected and for what purpose. This exchange creates a sense of control for the consumer, strengthening trust and helping to cultivate long-term loyalty.

Legal compliance

In some cases, getting the customer’s consent before using data is more than just a good business practice– it’s required by law. Many governments are starting to enforce new regulations to protect consumer privacy. For instance, the EU’s General Data Protection Regulation (GDPR) requires companies to get a person’s consent prior to collecting or processing their data.

While GDPR is commonly associated with European companies, it also applies to any business who manages data from EU residents. Although there’s not yet an American equivalent, some authorities are introducing similar policies on a state level, such as the California Consumer Privacy Act (CCPA). Beyond this, it’s only a matter of time before similar requirements become more widespread.

How Modives Leverages Consumer-Permissioned Data in Insurance Tech

At Modives, we provide an experience like Plaid for the insurance space. Our insurance verification solutions rely on consumer-permissioned data to pull your customer’s policy information and determine whether it’s active, accurate, and adequate.

You can direct your customer to follow the application flow to log into their carrier, providing access to their insurance policy. Unlike vendors that rely on external sources like additional interest letters or third-party data, Modives retrieves information directly from insurance carriers in real time.

With this trust-centered system, businesses can securely access customer data to make informed decisions. Because the entire retrieval-to-analysis process takes place within a SOC-2 certified application, you can also prevent sensitive data from falling into the wrong hands. That means that for auto dealers and lenders, it easily fits into an information security program per the FTC Safeguards Rule.

Try a Consumer-Driven Approach to Data in Your Business

Want to learn more about how Modives can enable consumer-driven data within your insurance verification process? Get in touch with our team about CheckMy Driver for auto and CheckMy Resident for property.

Criminal Report

Criminal records coverage may vary due to (1) jurisdictions limiting what records are eligible to return and (2) TransUnion limiting records that do not meet its data quality standards. As of the Rev. Date, criminal records are available to return in:

Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Nevada, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia, Washington and West Virginia.

Rev. Date 01/10/24