💾 Archived View for gmi.noulin.net › mobileNews › 4597.gmi captured on 2021-12-03 at 14:04:38. Gemini links have been rewritten to link to archived content

View Raw

More Information

➡️ Next capture (2023-01-29)

-=-=-=-=-=-=-

Insurance and telematics - How s my driving?

Gizmos that track driving habits are changing the face of car insurance

Feb 23rd 2013 |From the print edition

Telematics not needed

SURVEYS routinely find that around 80% of drivers think of themselves as being

of above average ability. Sadly for them and happily for common sense their

insurers do not take such claims on faith.

Underwriters have traditionally used crude demographic data such as age,

location and sex to separate the testosterone-fuelled boy racers from their

often tamer female counterparts. Now technology is giving insurers the chance

to see just how skilled a driver really is. By monitoring their customers

motoring habits, underwriters can increasingly distinguish between drivers who

are safe on the road from those who merely seem safe on paper. Many think that

telematics insurance will become the industry norm.

Most variants of this model rely on a simple device in the car that beams data

back to the insurance company. (Other schemes, like one operated by Aviva, a

British insurer, rely on smartphone apps downloaded by customers.) In America,

the focus is on how much time a car spends on the road, or pay-as-you-drive .

Europe, where Britain and Italy lead the field, has typically emphasised driver

ability ( pay-how-you-drive ), tallying how often brakes are slammed or corners

taken on two wheels. Some devices include location-tracking options that can

figure out if, say, a car is doing 80mph in a 50mph zone.

The reward for prospective customers can be a discount ranging from 10% to 40%

off a standard rate. The drivers most likely to benefit are those the standard

insurance market is overpricing because of their age or other factors, says

Mike Brockman of insurethebox, a British underwriter.

Last month the firm launched Drive Like a Girl , a service that goads young

drivers into safer motoring with the lure of cheaper car insurance. The spur

was a recent EU court ruling that bars insurers from discriminating on the

basis of sex. This forces young women to pay more, since they are shoved into

the same underwriting pool as crash-prone young men. With telematics, however,

women can demonstrate that they really are safer drivers, and receive a

discount. So can some men. You don t need to be a girl to drive like one, Mr

Brockman says.

The rewards for insurance companies could be even greater. They get to

cherry-pick their customers based on data, not crude assumptions. We have a

way of actually identifying better drivers, says Dave Pratt, general manager

of the telematics division at Progressive, an American underwriter. That is a

huge advantage. The firm says a third of new business comes via its telematics

scheme. The hefty discount it offers to the best drivers still leaves it with

plenty of margin. More important, it avoids insuring the expensive car-wreckers

of the future. By granting lousy drivers no rebate, it nudges them to buy

insurance elsewhere.

A side benefit is that insurers can more easily identify scams if a costly

whiplash claim is submitted for what was in fact a small bump, for example.

This has driven growth in the Italian market, says Frederic Bruneteau of

Ptolemus, a consultancy.

Some also hail telematics as a way of improving driving standards, by making

drivers more aware of when they are behaving dangerously. Black boxes can be

made to beep when a car brakes too heavily, for example. They can alert

emergency services after a crash, too.

But customers (and some regulators) also worry about the privacy implications

of tracking drivers. Progressive no longer monitors cars location for fear of

appearing Big Brotherish. Its gizmos only stay plugged in for six months to

establish a snapshot of driving frequency and style, after which the discount

is permanent.

Despite such concerns, the market is growing quickly. Customers like

personalised discounts. And insurers crave any source of data that helps them

sift those drivers who are above average from those who merely believe they

are.

From the print edition: Finance and economics