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TomTom Satnavs To Set Insurance Prices
nk497 writes "TomTom has signed a deal with an insurance firm that will see its satnavs used to monitor drivers. Fair Pay Insurance, part of Motaquote, will use monitoring systems built into the TomTom PRO 3100 to watch for sharp braking and badly managed turns, rewarding 'good' drivers with lower premiums and warning less skilled motorists when they aren't driving as they should. 'We've dispensed with generalization's and said to our customers, if you believe you're a good driver, we'll believe you and we'll even give you the benefit up front,' said Nigel Lombard of Fair Pay Insurance."
Unless this thing has a gyroscope or accelerometers, I don't know how useful the braking and turning data is.
GPSR's really aren't THAT precise for those things.
Now I know someone's about to chime in with that "dopler shift" bullshit, but all consumer-grade GPSR's use position change over time for all movement measurements.
The speed data makes sense, not the rest of it. Maybe establishing driving habits, like too many hours on the road. Or when you drive, and where.... geographic and time data could show them who drives in high-accident areas.
THL phish sticks
Observation: Insurance rates are currently set at a level that the market and competitive pressure will bear, without this additional information.
Prediction: Early adopters will see some benefit in lowered insurance costs, but once most people are enrolled, insurance rates will creep back up to previous levels (that being the established level that the market will bear). Insurance companies will create additional rules that will facilitate a greater rate of insurance claim denial based up the new information, and will see greater profits arise due to this. Consumers overall will see no benefit in the long run.
...as a "discount" for those exhibiting the behavior they want. In fact, they simply raise prices for everyone at such a rate that the discount is in fact the lack of a penalty. Yet, somehow, dressing it up in this way avoids backlash and consumer protection lawsuits, while convincing people to give up their privacy in ways they would have never considered has it not been for the phantom carrot of a "discount".
Before someone says "free market!", keep in mind that nearly every insurance company does this to some extent, usually with no proof of their claims, and insurance is legally required to some extent in most of the country. The free market does not exist, never did, and never will.
Great Intellect...
Most of the time sharp braking is for something which shouldn't be in front of the car
No, sharp braking is what happens when you are yacking on your cellphone or reading a newspaper, and glance up to see that you are about to rear end the car in front of you.
My guess is that frequent sharp braking is strongly correlated with bad driving.
and it's also how insurance dies. Isn't the purpose of insurance to distribute risk?
Speeding should be a dangerous risk.
It certainly should be, and it would be if speed limits were remotely sane. Right now speeding is just travelling at the same speed as 90% of the other cars on the road. Speed limits should be set at a speed that most drivers would not be comfortable driving at.
Ehhhh NO....
What they do is pigeonhole. Statistics works because it works over a crowd. However statistics has a flawed insight in that it is hindsight and self-fulfilling.
Imagine the following. Let's say that walking 1 KM per day reduces your chance to die by 80%. Thus insurance decides to say, oh wait I can offer better rates for life insurance if I look at all those people who walk 1 KM per day. So off the insurance goes and people start walking and we are happy little bunnies. No, we are not because what happens if everybody starts walking 1 KM per day? Answer probably pedestrian accidents go up, and thus the rate of death that the actuaries came up with is wrong, and they end up paying higher than they calculated. Thus the insurance runs out of money.
This is the problem, and this is why insurances in their quest to nail down their clientel is actually doing a disservice to themselves.
So now comes the golden question, "ok if you are so smart point out where this has happened?"
Answer; real estate. Remember those loans with no questions? Well it was the result of some actuarials thinking this through and saying, "in the past only X have defaulted thus these loans are a gold mine." So off the investment banks go and write oodles and oodles of these loans. What they forget is that if you write too many of these loans the probability of default actually goes way up since the conditions are not the same. And what ends up happening? Oh yeah the US government has to bail out the industry.
So sorry beep wrong answer... There is less value in doing this. The insurance companies would be better off just looking at the overall records and leaving it at that.
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
The unintended consequence (for drivers in general) is that good drivers will see a modest improvement in rates, and less good drivers will see sharp increases. As a result the latter will be forced to leave for an insurance company that doesnt do monitoring, which changes the odds/profits for their driver pool. By effectively cherry picking their customers, insurance companies that monitor are gaming the system to improve profits at the expense of all the companies that dont. This isnt sustainable and can only result in all insurance companies instituting monitoring to keep the playing field level.