Pay-As-You-Drive Car Insurance

Sipos writes "The BBC has a story about pay-as-you-drive car insurance. There is not that much detail about how it would work but it seems that a black box in your car monitors your position using GPS. This information is then reported to a insurance company computer which then works out which roads you used and then bills you accordingly. The article seems to suggest that this will make insurance cheaper. Surely this will only happen for people who drive on dangerous roads less than average, after all there are no less accidents as a result? It also makes no mention of the potential for abuse of privacy this could involve. Are people really prepared to let insurance companies track their every move to save money on car insurance?"

Comments

Big brother-in-law, the insurance salesman

[qmchenry]

I'm already thinking of hacks... I wonder how hard it would be to spoof GPS signals? Of course, 5 cents worth of aluminum foil over the sensor would work, too. Only if they correlate their measure of distance versus the car's odometer would they know if the system had been duped.

They could also know if you were speeding on a certain stretch of road and up your premium accordingly. "We noticed that you failed to signal your intention to turn 18 times last month. Tsk tsk. Oh, and apparently you've been eating at McDonald's quite frequently, so we've increased your health and life insurance premiums, too."

Re:Big brother-in-law, the insurance salesman

[realdpk]

And when you decide to opt out of it, will they count your "violations" against your score as if they were ticketed? Probably.

Re:Big brother-in-law, the insurance salesman

[Anonymous Coward]

"Of course, 5 cents worth of aluminum foil over the sensor would work, too."

Great, so it's not enough anymore to just make a tinfoil hat for myself. Now I have to make one for my car, too!

Re:Big brother-in-law, the insurance salesman

[StarOwl]

Articles on one insurer in the US doing this in the US include:

Insurer Eyes Driving Habits

Insurers offer discounts to customers who allow their driving to be tracked by electronic monitors

Progressive to Use Data-Logging Device To Help Drivers Save Money On Auto Insurance

In the current US trials, reporting the driving information is voluntary. Of course, if/when more consumers participate, I'd expect base rates to go up as the folks most likely to qualify for discouts increase their participation.

Fortunately (or unfortunately for me, since I develop auto insurance rates at another company) the rating algorithm is patented by one company, so I wouldn't expect to see widespread adoption of this technology in the US anytime soon.

Re:Big brother-in-law, the insurance salesman

[fermion]

there is really no point. If you have an accident, and they show that you have manipulated the data, they keep your money and do not pay the claim. This would very simple to do if you have an accident in a location other than the one indicated by the GPS.

The real problem with this plan is that the current mandatory car insurance is there to make sure that if some causes an incident, there is money to pay for damages. Any complicated system that leads itself to abuse will just create more problems.

Re:Big brother-in-law, the insurance salesman

[jeremyp]

The BBC interviewed a spokesperson from the insurance company yesterday and they asked her about speeding. She said they absolutely would not be measuring your speed.

No, really.

Honestly, that's what she said and I believe her. I will not, however, be signing up for this scheme because insurance companies are amongst the scumiest most two faced companies there are and I don't believe her.

Re:Big brother-in-law, the insurance salesman

[rattler14]

whynot.net already came up with a very elegent and clever solution that gets around any sort of GPS, odometer, tracking measures.

Solution? Put it in the cost of gasoline.

Think about it. You need gas to drive the damn thing, you can't skirt around that issue. So the more you drive (and thus the more gas you use) the more you are paying for insurance. Now granted, this has a few flaws, namely that it is the lowest common denominator insurance. But perhaps that's a good thing. Additional coverage and plans above the standard could be purchased above and beyond what the baseline covers and would be strictly voluntary.

You can either read the book (which I found to be very interesting). Or just go to their website, here's the link for this topic

http://whynot.net/view_idea.php?id=499

enjoy

Re:Big brother-in-law, the insurance salesman

[bob_calder]

Progressive's history of intrusive and pseudo-scientific behavior began when Jack Green retired. They would definitely try to deny a claim if they felt like it. The fact is that the insurance industry is built on well documented statistics, but they have very real limits. Unfortunately, when marketing became more powerful than underwriting at the board table, the marketing guys imposed their own warped view of reality. (Think spammers in charge of network) All kinds of pricing alterations became common that were not adequately - or independently - justified by actuaries. The person who spearheaded it at Progressive was a real paranoid who took the rating structure to the next company she went to work for. Unfortunately, Progressive decided to keep the structure thinking that it had something to do with their marketing success. Maybe and maybe not.

My point is that stuff like this can get away from insurers easily and ends up badly when it is not supervised by adults.

Re:Big brother-in-law, the insurance salesman

[CristalShandaLear]

Umm.. so don't speed and use your turn signal?

Seems like a fair trade for lower insurance premiums.

How much are you willing to trade for life, liberty and the pursuit of happines? How big of a blue light special discount are you willing to trade for your privacy and personal information?

What if your life depended it, would you speed? What if every time you turn in the supermarket parking lot you don't use your turning signal, does the discount go away? Have they really thought this through? Have you?

First it was the little forms on the bottom of coupons. Then it was shopper cards. Then hidden little black boxes in cars. Then exposed little black boxes and let us use the info since we were going to anyway. And unconstitutional searches everywhere you bloody go from the movies to the airport.

Why don't we just have a sale. All Americans who are willing to give up ALL of their civil liberties in exchange for no taxes and discounts on everything you buy, please raise your hand. The line for your government implant is to the right (where else would it be?). The rest of you on the left are unpatriotic and can check in your citizenship unless you choose to join those on the right.

Don't you understand that what they are "requesting" today will be "mandatory" tomorrow? All these little chips and digs at our rights are just tests to see how much like sheep they can get us to act like before it's too late.

Call this flamebait, trolling, tin-foil-hat, wearing, whatever you want.

But every day we use a piece of our liberty that NOTHING short of complete and entire revolution can give us back.

So yes. Go ahead. Trade your every movement and purchase on this planet for a discount. And next year when the discount disappears but you still have to report your every move, remember this post and all the others like it that called you a fool.

Wrong turns

[Anonymous Coward]

So what happens when I make a wrong turn in LA and end up in watts or compton, does my insurance skyrocket?

cheaper on average because

[catbutt]

people will alter their behavior if they are being charged this way. Just as you will use less electricity if it is being metered rather than an "all you can eat" plan.

Pay As You go eh?

[Anonymous Coward]

Here is my idea. Pay as you go sex. If you last 3 minutes you pay for 3 minutes only.

Why not?

[kavau]

Are people really prepared to let insurance companies track their every move to save money on car insurance?

Why not? It makes perfect sense for people who use their car only every once-in-a-while. Why should they pay as much as someone who is commuting from LA to SF twice a week?

I think many people feel they've nothing to hide and would opt for this payment plan if it can save them significant amounts of money. And as long as it is voluntary (i.e. you can always go with a flat rate), I don't see a problem with it.

I don't trust 'em

[ameoba]

Based on my experience with insurance companies, I don't really expect to see them use this to lower premiums, just to raise them and have excuses to terminate policies.

A great example of the shadiness of insurance companies happened a few years ago in Washington State. The insurance companies lobbied heavily to limit driving privliges for those 16-18 (limited number of minors as passengers, restrictions on driving after dark and whatnot) citing studies saying that it'd reduce the accident rates by a significant margin, which it did. The problem is that they never adjusted the insurance rates downwards to reflect these lowered accident rates, effectively giving their profits a big boost.

Re:I don't trust 'em

[Anne Thwacks]

I live in the UK, and I can tell you there is no way that premiums are based on actuarial risk. Premiums are related to percieved ability to negociate. If you live in a poor area, your premiums go way up. If you drive a 2 litre diesel (75HP), your premiums is the same as for 2 litre petrol (150HP).

If you buy a second car (so as to have a big one when you need it and a small one when you don't) you cannot use your no claims bonus on both cars, even if you can't drive two cars at once! If you get a minibus, you cant use the no claims bonus from a van on the minibus, or vice versa, even if both are the same Ford Transit body.

You have to declare the value of the vehicle when you apply for a policy, but if you write off the vehicle, they value it half what you did. I could go on, but no need ... its pretty clear that these people are major league crooks. And they use the fact that insurance is compulsory to demand money with menaces. (Pay insurance or we send the boys in blue round to visit...)

Re:Do We Really Need Mandatory Insurance?

[kavau]

If someone smashes into you (and is found at fault) who has chosen not to have insurance, you take them to court and force them to pay for your car.

And what if they hold a minimum-wage job at McDonald's? You'd probably be waiting 500 years to get your money.

"I'm sorry sir..."

[nzgeek]

"...but our GPS log show that you were travelling at 56 mph moments before the accident. We're going to have to decline your claim..."

People don't seem to realise that an insurance company's sole purpose in existence is to NOT pay out on claims. Otherwise how do they increase their profits?! Anything that can help them reduce the percentage of claims that are paid out will be snapped up.

Re:"I'm sorry sir..."

[Skater]

They make money not paying claims, but they make more money on investments. That's the real profit - the collecting of premiums and paying claims is just supporting their stock market habit.

--RJ

Re:No thanks

[beakerMeep]

Exactly. It leaves me wondering too, wouldn't the insurance companies be against this for the same reason the cable companies are against a la carte programming? Because the good subsidize the bad. Obviously they wouln't want to do this if the majority of people are going to save money as that would just decrease their revenue. Hence I think the "save money" thing is really just a ploy to implement a new system that would actually have the same effect (for most people) of increased rates. Thanks but no thanks.

Bad idea

[bobetov]

My wife and I were discussing a different take on this concept a couple of days ago, and came to agree that this kind of thing is a *bad idea*.

Our conversation was about health care premium reductions for opting out of "maternity" services. But I think the same arguments apply here. Basically, this kind of system defeats the core purpose of insurance; namely, to share risk.

There are times when charging more for a given behavior makes sense (eg quitting smoking) and times when it doesn't (eg driving in safer neighborhoods). Basically, given that people for the most part can't choose where they drive, this amounts to a violation of the risk sharing priciple. It doesn't drive down overall premiums, simply shifts those premiums to an unlucky subset, while getting others a break the didn't earn.

And of course, the system is designed to encourage safer driving, but we already have that in the form of accident reports and moving violations, which bring up your premium dramatically when you commit them.

I don't want to see a system where the rich folks get lower premiums due to driving in suburbs, while urban drivers get nailed. It leads to that insurer ending up with safer drivers overall (as the higher premiums for those in Compton drive them out of the insurance pool). In fact, in most cases such preferential insuring is actually illegal.

You can't accept only low-risk drivers as an insurer, because doing so breaks the risk-sharing concept that underlies the whole system.

Less greenhouse gas emission

[presidenteloco]

I'm surprised that in 35 posts no one has mentioned that pay-as-you-drive insurance would tend to decrease driving, and so would help reduce greenhouse gas emissions, global warming, and urban air pollution.

These would seem to be the major benefits of this
idea by far, in the grand scheme of things.

Also. There's no need to track everywhere the car
goes in Orwellian fashion. All you need is a new
design of tamper-proof odometer that can be read
once a year when you renew your insurance.

Re:Simple Fix

[mikael]

Why don't they just take down the miles of the odometer

Some people do try that. However, odometers are designed in such a way that it obvious to see when the number has been reversed (the gears have assymmetric shaped teeth that allow the odometer to count upwards). Odometers which have been "clocked back" usually have numbers that are misaligned like certain styles of web page counter.

Re:Do We Really Need Mandatory Insurance?

[British]

And what if they hold a minimum-wage job at McDonald's? You'd probably be waiting 500 years to get your money.

Here's where my beautiful idea comes into play. If they have no money/assets/whatever to pay you off, you get first crack at their organs.

I'm betting you could get quite a good deal on one of their kidneys. Get said bad driver's kidney, then sell it to some rich couple who's kid needs a transplant. Doesn't matter if they are an organ donor or not.

Would also be an incentive for bad, noninsured driver no to do it a second time.