Telematics is a technology that’s seeing massive adoption on an unprecedented scale, heralding the start of a new generation of insurance based around the performance of the driver, rather than just what vehicle they’re driving, where they live and how old they are. However, certain roadblocks remain and often times they’re legal, but it seems like in New York at least there won’t be as many problems, as the Department of Financial Services (DFS) has already begun urging insurers to take up the new tech and begin giving consumers the option to take on usage based insurance (UBI) policies.
For a government organisation, the DFS is pushing pretty hard too, talking (via InsuranceJournal) about all the benefits of telematics. It explains how the data is collected and can be used to create driving profiles and therefore offer discounts to ones that drive safely, less frequently and over shorter distances. This makes sense for all, since the insurer takes less risks and so does the driver, thereby improving their own chance of avoiding an accident.
“[Telematics devices] can save policyholder money and save lives by making our roads safer. We encourage all New York auto insurers to submit plans to our Department making use of this innovative technology,” said DFS Superintendent Benjamin Lawsky.
Esurance was one of the first companies to receive approval by the DFS
However in an interesting move, the DFS also addressed perhaps the biggest concern consumers and some lobby groups have regarding telematics: privacy. It said that it was comitted to making sure that privacy was protected by insurers and would be monitoring their use of the data to make sure it wasn’t sold on to third parties without express permission or at least notification of customers. It also said it had only approved UBI schemes, on the basis that they remain voluntary and therefore no consumer would feel pressured to take on the tech if they didn’t want it.
One aspect of the scheme that isn’t necessarily voluntary – and the DFS still approved – though, was parents adding telematics to their teen driver’s vehicles. This then allows them to keep an eye on their kids while they’re driving, especially soon after passing their test, and therefore make sure they aren’t accelerating too quickly, or driving anywhere they aren’t supposed to. The Esurance app installed on the teen-driver’s phone, can even make it impossible for them to text, call or use applications whilst the car is in motion – except 911 emergency calls.
Esurance is just one of the company’s currently accepted on the scheme, but not all of them are. However it seems likely that over time, all will make sure to add the voluntary clause, as they’d be fools to miss out on the lucrative New York market over a provision for voluntary usage of the technology.
So far, insurers approved to operate telematics UBI insurance schemes in the New York area are: Esurance, Allstate, Allianz, the Hartford, Progressive, State Farm, and Utica National. The DFS currently has several other insurers that it’s in talks with to approve their schemes in the state, but will need to check over their policies before giving explicit approval.
Understandably, the New York Insurance Association is pretty pleased with the DFS endorsement. President Ellen Melchionni even came out to pay the entire scheme on the back. “The New York insurance Association believes usage-based insurance is a great optional program that can be employed by insurers and policyholders,” she said “It is key for these types of programs to not only be voluntary for consumers, but also insurance companies.”
She went on to further praise the DFS for its forward thinking, stating that continued innovation would increase competition in the market and therefore improve products for consumers, whilst encouraging business growth.
