Insurance Companies Try Out Auto Black Boxes

tekiegreg writes "It looks like the first black box test for auto insurance companies is underway. While this may be a privacy issue, it can also make better drivers out of everyone if insurance rates are adjustable based on the way everyone drives. This was covered on Slashdot before however this seems to be one of the first workups, that can even include tests on speed and braking, not just location."

Comments

You'll all have to do this now

[waterwheel]

I've posted this to a forum I run for actuaries - the mathematical types who price insurance. I won't post a link as I'd rather not have the fame. But it will be interesting to see what they have to say

However, in the article, Charles Samuelson makes a point that is well known when it comes to pricing insurance. Progressive is basically selecting the cream of the crop for their clients. That means more money for them (less claims probably), and less for other insurance companies. So the other insurance companies are forced to start underwriting for this as well. Pretty soon, you're screwed because all the insurance companies have to take it into account to remain competitive.

Think that's only a vague thing? At one point nobody priced life insurance by whether or not you smoked. In fact, it was probably only about 30 years ago they started doing that. Now of course, they have two sets of prices - those that smoke and those that don't.

In short, you'd better get used to the idea of having black boxes installed in your car, and having it taken into account on your insurance. It's profitable for the insurance companies, so it's coming to a policy near you.

Re:No.

[Nos.]

Welcome to socialism :)
Okay kidding, I live in Canada, Saskatchewan to be specific. Our mandatory (auto) insurance comes from Saskatchewan Government Insurance. Its a regulated body. If they want to raise rates, they have to justify it. The most I have ever paid for insurance is $1000/year (for a '99 Sunfire GT in 99). There is a flat rate per car, not per driver. If you have a good driving record over the last few years, you get a small reduction up to I believe 7%. However, if you have a bad driving record, it can go over the base rate. It might not be perfect, but it does let safer drivers (or at least lucky ones) pay less than bad drivers.

Re:No.

[erick99]

Insurance companies typically get away with "poor mouthing" by demonstrating that claims damn near exceed premiums. They do not, however, show the income from investing the premiums. The next time an insurance industry person tries that, ask him/her what their company's ROI was for premiums invested in equities, real estate, re-insurance, etc.

Cheers,

Erick