Opportunities for “broker-driven” usage-based auto insurance are likely to be down the road, but brokers are telling a large Canadian mutual that their insurance customers don’t want their insurers monitoring how they use their vehicles.
“Our brokers are advising us that our customers are not fans of telematics,” Wawanesa chief strategy officer Carol Jardine told Canadian Underwriter this week.
Insurers using telematics to determine auto rates include The Co-operators Group Ltd., Canadian Automobile Association (CAA)’s club in south central Ontario, Intact Financial Corp. and Desjardins General Insurance Group.
Some insurers monitor the times their customers drive, along with total distance driven and behaviour such as sudden acceleration and hard braking. Ontario’s regulator allows carriers to offer discounts for low-risk behaviours, but does not let carriers raise rates for risky behaviours.
“Our customers that buy from our brokers do not wish to have a telematics device installed in their car,” Jardine said. “Whether they are concerned about privacy, or monitoring of their driving behaviour, lots of people don’t like telematics and our brokers are telling us that the customers who like telematics are not the customers of our brokers.”
IBAO announced in 2013 that it was teaming up with Ingenie Canada to roll out telematics in Ontario, underwritten by Aviva. But in 2016, IBAO president Traci Boland said the association was no longer offering it.
“I just don’t think the marketplace was at the right position for that product at the time,” IBAO CEO Colin Simpson told Canadian Underwriter in a recent interview. “I think it was the right thing to do at the time because it brought a lot of attention to the use of data, the role of the broker, but as technology advances, then you really need to be a specialist in that field to be able to be effective at it.”
It is unlikely IBAO will launch a similar program, Simpson added.
“The IBAO is not skilled to implement something like that,” he said of telematics. “I am sure there are going to be opportunities for broker-driven solutions to be put in the marketplace. Whether IBAO drives that, I don’t know.”
Using telematics “could conceivably” reduce claims costs, A.M. Best Company Inc. associate director Raymond Thomson told Canadian Underwriter recently.
But the Financial Services Commission says there are “no studies or reviews that provide actuarial evidence to quantify” the effectiveness of telematics in Ontario.
Desjardins lets vehicle owners save up to 25% on their premium. CAA also offers discounts, advising drivers to they can get a higher discount if they avoid speeding, avoid driving between 12:00 a.m. and 4:00 a.m. and driver fewer than 12,000 km a year.