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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."
and the devices are temporary.
The wife and I currently use Progressive and we did their little driver-monitoring program a year or so ago. Our vehicles were only monitored for a couple months.
We ended up saving some money (Progressive was already lower than all the competition we had scoped out, but the program made it even a little lower).
Of note were the reasons given:
1. The devices were able to confirm our relatively low miles-driven.
2. The devices found that we drove during "safe" times of day (if I remember right, it's the wee hours of the morning that are the "unsafe" times, probably due to increased rates of drunk driving).
3. My wife saved a little more than me, due to my slightly higher incidences of "rapid stops." Apparently I should've punched through those yellow lights to save time AND money.
This is the same weird logic used in health care insurance, which also wants to charge more or less based on individual risk. So if we follow their logic...
Extrapolating this out, they eventually end up charging each individual exactly what it will cost the insurance company to pay each individual's claims plus their profit margin. At that point, the insurance company is a useless middle man and everyone may as well be self-insured.
but the simple statistical fact is that people who habitually exceed the speed limit by a considerable margin do have more accidents.
Cite please.
This says that driving faster absolutely increases the odds of an accident. The faster you are going the less time you can react, this is intuitively true and no one disputes this. If we all drove 10mph, there would be fewer accidents, virtually nobody would be injured in them when they occur.
And that speed differences between drivers leads to more accidents. In other words, overtaking is dangerous, and lane changes are dangerous. Again, I don't think there is any disagreement here.
http://erso.swov.nl/knowledge/content/20_speed/speed_and_accident_risk.htm
This next link however is really interesting:
Although changes in vehicle speeds were small, driver violations of the speed limits increased when the posted speed limits were lowered. Conversely, violations decreased when limits were raised. This does not reflect a change in driver behavior, but a change in how compliance is measured, i.e., from the posted speed limit.
http://www.motorists.org/speed-limits/effects-raising-lowering
Read that again, they raised and lowered the speed limits in places, and found that drivers for the most part did not change their speed by very much (although did record that it went up slightly when the limits went up and down slightly when speed limits went down). But primarily there were simply more people speeding when they lowered them, and fewer people speeding when they raised them.
Accident rates were not affected.
Thus there are plenty of indications that driving too fast for the conditions (just excessively fast, or significantly faster (or slower) than the cars around you) is dangerous and leads to more accidents.
However it strongly refutes the idea that exceeding the posted speed limit is itself a significant predictor of accidents. As you can lower the speed limit 10mph, and suddenly a lot of people are speeding, and the accident rate doesn't move.