Telematics: The Future of Car Insurance?
Never heard of telematics? Just wait, you will. Telematics, or usage based insurance, is the newest trend in auto insurance. Telematics will provide your auto insurance company with real time driving information: how fast you drive, how hard you brake, how much you drive, the time of day you do most of your driving, etc. These factors have been shown to be far more predictive of insurance claims rates than the factors generally used by most car insurance companies now. that is gender, age, where you live, the type of car you drive and your credit rating.
Would you be willing to let your car insurance company monitor your driving in real time via a telematic device installed in your car? There are legitimate privacy concerns. Where is this information stored? Who has access to it and for what reasons? Studies show U.S. drivers are about evenly split on whether they would let their car insurance company put them under surveillance. For some, it depends on how much they might save on their car insurance. For others, no amount of money is worth the invasion of privacy.
Is telematics the next trend in technology? We are already embrace biometric monitoring. I’m talking about those tech bracelets that track the steps you take every day or the amount of calories you burn and transmit the data to your smartphone. Nobody worries about that info right? Or do you? And if telematic auto insurance is the next trend, what’s next? Health insurance? Life insurance?
Regardless how you feel about it, telematics is here to stay. According to an industry report by Deloitte Center for Financial Services, “The genie is out of the bottle. The [insurance] industry as a whole is not likely to go back to relying on its traditional methods of assessing auto risks.”
Is there a bright side? Some analysist suggest telematics may lead to the “gamification” of driving. In other words, make the driving experience more interactive, competitive, gratifying and maybe even fun. Like a real life video game that provides real world incentives for safer driving. Hmmm. I’m all for that, but I’m not sure I want to do it at the price of my privacy.
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