By Katie Stobbart (The Cascade) – Email
Print Edition: September 11, 2013
In an ideal world, advancements in driving technology decrease the number of accidents, improve vehicle efficiency, and encourage good driving habits. A relatively recent development also purports to change what drivers pay for insurance.
Using telematics, some Canadian insurance companies hope to introduce usage-based insurance, which is already practiced in the US and the UK. Telematics, essentially, is technology which collects data from your vehicle. How often do you accelerate? How many kilometres do you drive each year? How often and how hard do you use your brakes? Are you following the speed limit? A device voluntarily installed in your car records this information, and good drivers can save up to 25 per cent on their insurance premiums.
It’s a nifty idea. Companies in Ontario and Quebec are already offering it as an option to their customers, with 7000 clients already signing up for Desjardins Insurance’s usage-based program. CTV News reports that Desjardins plans to offer the program “in the rest of Canada once it gets regulatory approval.” Hopefully, the implementation of this device will be win-win; drivers get lower rates, there are fewer accidents, and people are given financial incentive to improve their driving skills.
However, some of the information recorded by the device which may affect insurance rates doesn’t seem fair – according to a report by the CBC, Desjardins’ telematics device also records the time of day a car is driven, since “the hours between midnight and 5 a.m. … are considered to have a higher likelihood of accidents.” Does this mean that commuters who start work early or people who work late may not save as much on their insurance, regardless of their skill as drivers?
The Calgary Herald says that telematics came into play after a ruling in Europe which kept insurance companies from discriminating against drivers based on their sex – young male drivers unfairly paid higher rates than females did. Usage-based insurance offers better rates based on driving skill, not on generalization.
Desjardins says data collected from telematics devices can’t be used to punish poor drivers by increasing premiums or using it for claims. But it will be interesting to see whether this particular regulation continues in the more distant future of the technology. If drivers’ habits don’t significantly improve with awareness of their own shortcomings and financial savings for better driving, what then? Telematics certainly seems to have the potential for driver monitoring, especially for those who frequently drive irresponsibly. After several years of voluntary implementation, maybe telematics will be included in new vehicles at the manufacturing stage, and insurance rates (or other driving-related expenses) will be tied to a driving ‘score.’
I’m not saying this is a bad thing – it would be great if everyone could drive well and thus lower rates. It would also be nice to see greater accountability and transparency for drivers. How much easier would it be to find a vehicle involved in a hit-and-run? It would definitely be an effective way to discourage speeding. Some have voiced concerns about the device being an invasion of privacy, but apparently the only people who need to be worried about telematics are those who break the rules… and even that won’t be a factor for quite some time. For now, the usage-based rates are just a way to encourage better, safer driving. And safer roads are definitely okay by me.
I just hope the application of this idea, seemingly full of positives, doesn’t turn sour.
