New technology helps insurers track driving habits
July 1, 2014
Auto insurers are growing increasingly savvy when it comes to using new technologies.
In-car sensors, which are also known as telematics, are now being used by major insurance carriers such as State Farm, Progressive and Allstate, according to a recent report from Forbes. The sensors allow auto insurance companies to monitor a driver's performance, whether it be their top speed, braking habits or the time of day they choose to drive.
Dave Pratt, general manager of usage-based insurance for Progressive, told Forbes that more than 2 million vehicles have been equipped with a telematic device. He said about two-thirds of all participants receive a premium discount of 10 percent to 15 percent.
“We think it might allow us to build better predictive models,” Pratt said. “A mile you drive on a highway is probably less risky than a mile on a city street.”
The devices don't sit well with everyone
While many drivers have welcomed the chance to look at their performance records, the idea of a telematic device that tracks where a driver goes isn't for everyone.
Some consumers are equipping their vehicles with a telematic device to track driving habits.
“Most consumers would be uncomfortable if the insurance company were riding shotgun and measuring how fast they took a turn,” Carmen Balber, executive director of Consumer Watchdog, told Forbes. “If I live in a neighborhood where kids play in the street a lot, I'm going to slam on my brakes. It doesn't mean I'm a bad driver.”
The devices also track the time of day or night a car is on the road. Drivers who use their vehicles at night are deemed more of a risk. Tom Taylor, vice president of advanced strategy for Verizon Telematics, said that late nights are deemed a risky time to drive because there are more high-risk drivers on the road.
Balber believes this could negatively impact drivers who are forced to take the roads after dark. She stated that drivers working a night-shift job will have to be on the road after midnight, which could penalize them in terms of insurance rates.
Another issue for some people is the prying nature of an in-car sensor. Paul Stephens, director of policy and advocacy for Privacy Rights Clearinghouse, told Forbes that he believes telematic devices create a “slippery slope.”
“They may start out collecting benign information, but what tends to happen is, the insurance company will want more and more data to the point where it becomes extremely invasive,” Stephens said.
Parents like the options
Jeff Branson appreciates the information that he receives from his telematic device. Branson, the police chief of Mattoon, Illinois, doesn't have an in-car sensor in his vehicle, rather he's tracking the driving habits of his 18-year-old son, Chase.
Branson monitors his son's driving habits with a device provided by State Farm. He can track the data through a car port that collects information on mileage, braking, turns, acceleration and what time of day his son is driving.
The device then uploads the data to the company and uses it to rate drivers. If the drivers provide safe driving habits, they are then eligible for the company's “Drive Safe & Save" discount program. Branson also receives notification through an optional monitoring program in regard to his son's speed and location, though that information is not sent to his insurance company.
Jeff Chester, executive director of the Center for Digital Democracy, told Forbes that users must take the good with the bad when it comes to in-car sensors.
“On the one hand, we are turning the car into an informant,” Chester said. “At the same time, there is a reasonable use, for example, to ensure that children are driving safely. We need to have a national debate and look at best practices and regulation with these data-connected cars.”