Usage based insurance plans are starting to see widespread adoption
Usage based auto insurance is beginning to pick up momentum in Ontario, Canada, but the Financial Services Commission of Ontario has been slow to grant approval for the technology used for this type of insurance coverage. Insurance companies operating in the province have begun applying for approval to use the technology that is capable of monitoring a person’s driving habits. Insurers suggest that this technology could help lower insurance costs for drivers significantly, depending on how often they actually drive.
Telematic devices may help reduce claims payouts as well as insurance premiums
Currently, Desjardin Insurance is the only company that is offering a usage based program in Ontario. Three other insurers have won the approval to offer these programs as well, but none of them have launched products yet. Baseline Telematics is one of the firms that offer the technology supporting usage based insurance. According to the company, there is an average 40% drop in claims payouts for insurers because drivers tend to be more cautious when they know they are being monitored. According to Desjardin Insurance, drivers in Ontario would cave approximately 11% on their insurance premiums.
Regulator shows concern over the security of consumer information
While usage based insurance is becoming more popular, the Financial Services Commission of Ontario has been slow to grant approval for the use of telematic technologies. One of the regulator’s concerns has to do with the privacy of drivers. Telematic devices are capable of collecting information, such as where a driver is going and how long it takes them to arrive at that location. The regulator has opted to take a cautious approach to the approval it grants to this technology in order to ensure that the information collected is not exploited in some way.
Usage based insurance plans are becoming popular in the US as well
Usage-based auto insurance is becoming more popular throughout North America. In the U.S., the use of telematic devices is becoming quite normal as drivers look for ways to reduce their insurance premiums. While there are still concerns regarding the security of information being collected by these devices, insurance regulators in the U.S. have shown strong support for the concept of usage based insurance products.