Risks and Benefits of Data Portability: The Case of Black Boxes in the Italian Motor Insurance Market

Over the last decade, Italy has enacted many legal reforms to promote the installation of black boxes in motor vehicles for insurance purposes. The rationale behind this reform is the idea that black boxes allow for a more precise personalization of insurance products and reduce the risk of fraud. The last of these reforms focuses on data portability and gives policyholders the right to obtain some of the information collected by the black box in the previous year and to share it with another insurance company. The reform allows virtuous customers to transfer their reputation from one insurance company to another in order to reduce switching costs and to combat lock-in effects, thereby improving competition in the insurance sector. While data portability may indeed have beneficial consequences at the contractual level, its overall impact on the insurance market is much harder to predict. The aim of this paper is therefore to test the impact of black box data portability on the motor insurance market and to assess the risks and benefits of the reform from both the legal and the economic perspective.