An innovative automobile insurance product is on the horizon for Zehr Insurance Brokers, New Hamburg. That innovation is automobile insurance rating with telematics.
Telematics is where electronic data recording devices are built into cars or are portable, which provide vehicle use data to build underwriting profiles, and in turn develop rating discounts. The public is hearing of “up to 25% discounts in your car insurance” in the media.
A few years ago, Aviva Insurance Company offered their telematics product called “Autograph”. Recently, the Insurance Brokers Association of Ontario has studied putting telematic tools into insurance broker’s hands to help drive this innovative rating tool. John Zehr at Zehr Insurance Brokers feels the public will show great interest in it. There is movement and interest in the market for telematics. One Canadian insurer and some US Carriers are in the market with it now. Add this to the Ontario Government’s promise to the public that they will reduce auto rates by 15%, and our clients are looking for premium reductions.
Why is telematics good or what does it do for a client? The data recording devices measure several key items that configure to influence auto rates. For example, there might be 3 key items – when you drive, where you drive and how you drive. There is a measure of how you drive called an “accelerometer”. This measures your rate of acceleration and deceleration, G forces of turns, that sort of thing. Heavy deceleration tends to produce an increased frequency of not at fault rear end collision losses – direct compensation as the industry calls it. You can figure out the influence of the other points, including recorded speeding. It may not be perfect though. You could be the best of drivers for the how you drive factor, but it you drive between the hours of 7 – 9 am, or 4 – 7 pm on a regular basis, any benefit of being a good driver could be mitigated as those core hours produce the highest frequency of accidents – it’s commuters. The increased load of vehicles on the roadways during these peak times produces more accidents. Such devices could also take the guesswork out of asking underwriting questions of pleasure, commute or business use–the facts will speak for themselves. This feature could be very attractive for parents that wish to monitor their vehicle movements with their children driving. The reasons could be obvious.
So who owns the data? Zehr states this is a big consideration. According to the Insurance Brokers Association of Ontario, the telematics tool that will be put into the hands of the brokers will be for the benefit of the customer. “In theory, we will be able to offer this, via devices, mobile device apps or whatever, and insurers that get on board will be able to use this data to develop rating credits where it benefits a policy holder”, Zehr states. “The customer owns the data. They can take that data and shop around for themselves. So far, with the only other telematics product out there right now, the insurance.