Wednesday 18 February 2015

Internet of Things holds promise for car insurance: Mayers

thestar.com

Ontario consumers might see benefit in the ever painful cost of car insurance

Sylvie Paquette, president of  Desjardins Insurance at The Royal York Hotel. She  says the Internet of Things will mean new insurance products.  (Feb. 12, 2015)
Sylvie Paquette, president of Desjardins Insurance at The Royal York Hotel. She says the Internet of Things will mean new insurance products. 
As the Internet of Things gets going, one place where Ontario consumers might see some benefit is in the ever painful cost of car insurance.
Here in the GTA, we pay the most in Canada to insure our vehicles. The average annual charge is about $1,600 per car, about double what it costs in Quebec and the Maritimes. The reasons are regulations that don’t serve us very well, entrenched interests that resist change and fraud. An example of the latter: A judge ruled last week that Peel police Const. Carlton Watson was guilty on more than 40 charges of fraud related to writing false accident reports that passed off staged car crashes as legitimate.
The Internet of Things is the coming connectivity of common devices, allowing them to send and receive data. It won’t fix Ontario’s insurance mess, but it has the potential to make insurance cheaper by using apps and software that record and transmit your driving habits.
For those who want to opt in to these programs, the potential savings may be significant. The information you share cannot be used by insurers to raise your premiums, by it can be used to lower them.
The first of these usage-based insurance (UBI) programs arrived in Ontario almost two years ago when Quebec’s Desjardins Insurance launched Ajusto. It involves installing a GPS device the size of a credit card in your car which sends information to the insurer.
The device tracks how fast you accelerate and brake, the time of day you drive and the distance you travel. In exchange for meeting targets, the average Ajusto driver is seeing a 12 per cent discount on renewal, Desjardins says.
There are now 11 insurers with approval from the Financial Services Commission of Ontario (FSCO) to offer UBI products, including Intact, Aviva, CAA, Co-operators and Allstate. Some are offering policies and some are about to.
Desjardins Insurance president Sylvie Paquette said in an interview that good drivers could save even more, but FSCO has limited the data gathered.
In Quebec, once insurers meet basic criteria, they are free to offer any products people wish to buy, she said. It’s worth repeating that car insurance in Quebec is a lot cheaper than it is in Ontario.
Paquette says that while the media focuses on information privacy and such things as what information is stored and how safe it might be, customers rarely raise the issue. She suspects this is because they have decided to give up some privacy for a better deal.
Desjardins has found that two-thirds of Ajusto customers are more aware of how they drive. A third says they drive less. The information is available online, so a portion check their savings weekly. I tested a unit last spring and found it simple to use, but as a commuter driving in and out of the city, the upside would have been modest.
Paquette says a new version of Ajusto is coming in the spring. She won’t say what it entails, but hints at the Internet of Things, which would mean an app that allows you to bring the technology into your phone. (Aviva, for one, has been using this technology in Europe for several years.)
Paul-Andre Savoie, president of Baseline Telematics, a Montreal firm that provides insurers with usage-based software, says the policies create a virtuous circle. They tend to attract better drivers who are eager for a break. This means fewer claims, which lowers the insurer’s costs. That means better discounts.
When you bring the technology into a phone, the costs come down again, because you no longer need a physical plug-in.
Your phone is internet-ready and has a GPS. The GPS knows how fast you are travelling and where you are. The phone knows the time of day, can find out what the weather is like, road conditions and traffic. It can tie all that together.
If you get into an accident, it can record the time. Did you drift out of your lane beforehand? Was it raining? How sharply did you take the corner? Busy highway or quiet side street? How does this information tally with what you tell police or the adjustor?
“It will cost insurers less to gather information and they will know more,” Savoie says. “The more they know, the better they can create products that can give you a better deal. It puts the power of the price (of insurance) in the hands of the driver.”
The Internet of Things could also tie in to your home insurance. There are plenty of apps that remotely turn the heat up and down, time the lights or check burglar alarms. Pull all those features together and you could have a package.
Savoie and Paquette say the biggest obstacle to a faster rollout of new UBI products is the regulator.
“This is the future,” she says. “We’re ready, but the evolution of the Internet of Things is probably about three years away.”
In the meantime, if your insurance is up for renewal and you want to test the water, there’s plenty of choice. It is one way to lower your car insurance costs now.

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