Why Letting Your Insurance Company Monitor How You Drive Can Be a Good Thing

Hugh Pickens DOT Com writes "Kim Gittleson reports at BBC that car insurance firms like Progressive are trying to convince consumers that letting them monitor their driving behavior is actually a good thing. They say that the future of car insurance is not just being able to monitor individual drivers to give them lower prices, but also to make them better drivers. 'Now that we can observe directly how people drive, we think this will change the way insurance works,' says Dave Pratt, who says that Progressive has more than a trillion seconds of driving data from 1.6 million customers. '18-year-old guys pay a lot for insurance, but some 18-year-olds are really safe drivers and they deserve a better deal.' Better big data technologies, like the telematic driving data collected by car companies (PDF) or even information gathered from social media profiles, can help augment that risk profile. 'If I'm a driver that doesn't drive that frequently, and I have a pattern that would indicate that I drive more carefully than an average person with my profile, then I may be able to save 30-40% on my car insurance, and that's pretty significant,' says Joe Reifel. For now, using big data analytics for insurers is still in the early stages. Only 2% of the U.S. car insurance market offers an insurance product based on monitoring driving, but that proportion is projected to grow to around 10-15% of the market by 2017. And other countries, like Italy and the U.K., are already using the data to analyze not just risk profiles but also to determine who is at fault in car accidents. The future, most analysts agree is create a continuous feedback loop between insurers and consumers, so that consumers will react to the big data analyses that insurers perform and change their behavior accordingly. 'Bad drivers will at some point need to improve their driving or accept [having] to pay for the real risk they represent,' says Jacques Amselem."

Comments

Huh

[Anonymous Coward]

> They say that the future of car insurance is not just being able to monitor individual drivers to give them lower prices

So look, I've got this bridge I've been trying to sell...

A trillion seconds?

[Antipater]

Progressive has more than a trillion seconds of driving data from 1.6 million customers.

Using a gigantic amount of very small units tends to make the whole thing meaningless. In more meaningful terms, Progressive has about 174 hours of data per customer.

Re:Safe = Slow = Low?

[jonnythan]

That's not how it works, actually. Progressive's Snapshot discount doesn't take speed into account at all.

The three things they look at are:

1) How often you drive (miles)
2) What time of day you drive
3) Number of hard stops

I noticed that driving with a Snapshot for 6 months I became a lot more careful of hard stops. I gave other cars more space and drove much more defensively, even though I'm a very defensive driver already.

I think it's safe to assume that an insurance company is interested in metrics that actually correlate well to safe driving, since their business literally depends on it. They want to give the discounts to people who are actually less likely to get into accidents.

Progressive isn't the government. They don't want to just look like they're doing something about a problem. Their bottom line actually depends on it.