Within the past year, two Canadian insurance companies have launched usage-based tracking programs that could have important implications on road safety and insurance premiums.
The programs involve a small telematic device that is installed inside the vehicle, which then captures real-time data about your driving. It monitors how many kilometres you drive, the frequency and severity of braking and acceleration, the time of day you drive, etc.
The data is then sent to the insurance company, which evaluates it as a basis for determining insurance rates and applicable discounts.
Desjardins, one of the companies that offers the program (only in Ontario and Quebec, so far), says drivers who opt into the program are eligible to save up to 25 per cent on their insurance premiums.
Although auto data tracking is relatively new to Canada, it’s been used successfully in the U.S., Europe and Japan for years. Insurers in those countries say the devices have led to fewer claims, fewer accidents, and lower premiums for good drivers.
In theory, tracking devices could benefit drivers — who would argue against the potential for lower premiums and fewer accidents?
But the collection of personal driving data poses some uncomfortable privacy and legal questions.
Privacy advocates fear that the personal data collected could be used for purposes other than determining premiums. Insurance companies deny the suggestion and say the information is only used to set rates, nothing more.
The question of privacy has become more urgent in light of recent revelations that the American and British governments have been secretly collecting data from telephone and Internet providers, and many Canadians are wondering what surveillance activities Ottawa might be conducting.
There are also legal issues with tracking vehicle data. What if someone with a device is involved in an accident and the driving data is subpoenaed as evidence in a trial, similar to a bank or phone company complying with a court order? What if the storage of that information is compromised by computer hackers?
The idea of recording your driving activity might appear a little Big Brother-ish, but the argument could be made that surveillance is already part of our everyday lives.
Webcams record our movements in commercial buildings, retail stores and public spaces. Online viewing and shopping habits are closely analyzed, so advertisers can present us with products and services geared to our personal interests.
For now, data tracking devices offered by insurance companies are entirely optional, with no fees attached. Both companies also insist the information collected will not be used to penalize bad drivers. It is designed to reward good drivers and to encourage better driving.
But intentions and priorities could change over time. Some observers believe that bad drivers could eventually be made to pay higher premiums to subsidize the lower premiums offered to better drivers.
All in all, though, I think data-tracking provides a benefit to drivers. If a small device attached to your vehicle encourages you to drive safer and reduces the likelihood of traffic accidents, then our roads will be safer for everyone.
Despite the privacy and legal concerns, I believe data tracking will catch on and that other insurance companies will make it available.
To read details about a recent symposium on usage-based insurance, visit the Insurance Bureau of Canada’s website (ibc.ca). It’s under Past Events.
I’d be interested to hear what readers have to say about usage-based insurance. I’d especially like to hear from anyone who is using one of these devices
This column represents the views of TADA. Email firstname.lastname@example.org or visit tada.ca. Benny Leung, president of the Trillium Automobile Dealers Association, is a new-car dealer in the GTA.
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