Ask anyone and they’ll tell you they wish their insurance rates were lower. It was a popular topic during the provincial election earlier this year, with Ontarians being charged some of the highest auto insurance rates in the country. As technology continues to disrupt and change the insurance industry, there is the possibility to see drastically lower premiums. However, new technology often brings concerns surrounding privacy – and insurance technology is no different.
The biggest technological advancement to impact the industry recently is telematics. When a telematics device is installed in your vehicle, it is able to collect and share data on your driving habits. This includes kilometres traveled, speed driven, and instances of harsh braking. Your insurer can then analyze this data in order to create a stronger profile of your driving. Once installed, the device begins to record information on your driving behaviour and send it to your insurance company over wireless phone networks.
How can telematics lower insurance costs?
If you’re a safe driver, a telematics device can help prove this to your insurance company. Your premiums would be based more on your driving rather than demographic statistics such as age, gender, and postal code. Telematics also aims to help drivers who aren’t often on the road in order to provide lower insurance premiums.
Telematics are highly appealing to Ontarians. In 2012, the Insurance Bureau of Canada conducted a survey that found the majority of those polled are in favour of the device. The option was most popular among infrequent drivers, those who drive less than 10,000 kilometres a year.
With the introduction of telematics, pay-as-you-go insurance plans have been made possible. The first program of its kind was introduced to Ontario earlier this year.
Why are there privacy concerns?
Telematic devices are also capable of recording and sharing your location, when you’re driving, and how long you’ve been driving for. Should there be a hack or breach of security to obtain this information, valid safety concerns could be raised by drivers.
Additionally, as learned by many with the Cambridge Analytica data breach earlier this year, data is also easily used by companies to market and influence populations. Are telematic devices putting your information at risk of being exploited? Once the data exists, it’s at risk – even if no one is formally using it.
For CAA’s MyPace Program, the telematics device is sharing more than just the number of kilometres driven, yet that is the only variable that impacts the driver’s premium. Because of this, some question why CAA is gathering the data in the first place. In a recent interview, CAA President Matthew Turack says the information is for customers to use themselves. The data is accessible through the CAA app or online. Drivers would then be able to individually asses their driving habits.
Is it too big of a risk?
Privacy experts have chimed into the conversation on telematics to help consumers decide if the reduced costs are worth the risk to your privacy. They acknowledge that CAA is ahead of the game when it comes to being transparent on what data is collected and how it’s being used. CAA also has security measures in place to prevent outside parties from accessing the data as well.
What experts would like to know more on is how CAA will respond to potential secondary uses of the data, such as a security breach. They encourage insurance companies to embed privacy protections into the telematics devices to best protect customers.
Overall though, experts are not ruling out telematics.
Whether or not the savings that are associated with telematics outweigh the privacy concerns ultimately comes down to the consumer. Once you’re clear on the information being collected and understand the possibilities of how it can be used, you will be able to fairly assess the cost/benefit in order to make the right decision for you.