British firm launching digital device that rewards safe driving with insurance rebates
For the slight inconvenience of a digital black box that monitors driving patterns, a new driver can look for lower rates from Ingenie, a British insurance broker new to Ontario in partnership with Aviva.
Like many young men, Andrew Hoy has been dreaming about getting his own wheels since he first got his driver’s license at age 16.
Today at 20, his dream remains a fantasy he can’t afford because — like most of Ontario’s roughly 1.3 million drivers under 25 — he can’t afford the $7,000 annual insurance premium for just a basic car, despite having no tickets on his record.
“I have to be insured under my mom’s policy and drive her car,” says Hoy, shaking his head. “I just want my own car and to pay a reasonable amount for insurance.”
His story is all too familiar because the cost of a car, gas and maintenance pales to the horrendous quotes demanded by insurance companies. It’s a formidable barrier to a key rite of passage into adulthood, your first set of wheels.
Hoy and the other roughly 170,000 16-to 24-year-olds who acquire their licenses in Ontario every year may now find some relief. March 9 brings the Ontario launch of Ingenie, a British insurance broker that in partnership with Aviva is targeting young drivers with offers of substantially lower rates and a rebate for good driving habits.
Ingenie founder Richard King says the entire business model is built around an a black box in the vehicle and an interactive mobile application. The technology provides constant feedback to young drivers and rewards them with further discounts of up to 25 per cent, paid immediately, based on reviews of their driving actions every 90 days.
The system is an extension of what’s called telematics — capturing data in real time, then applying an algorithm to analyze and flag behaviour. This concept of User Based Insurance (UBI) was introduced a couple of years ago to the Ontario general insurance market. But this is the first time a broker and underwriter have specifically targeted young drivers in Canada.
Instead of being rated against a sea of data from all drivers in their class, they are rated on their own performance.
“We’re here because we can see young Canadian drivers are discriminated against and that’s why they continue to have to be on mom and dad’s insurance and can’t get their own vehicles,” King says.
Ingenie is confident that results here, based on existing data and research, will match those in Britain, where the firm has operated since 2011.
Ontario’s status quo means that all drivers younger than 25 are considered high risk if they want to insurance their own vehicles, often regardless of the type or age of vehicle.
Young drivers are burdened with statistics showing auto collisions are the leading cause of death for those aged 15 to 24. The age group accounts for about 12.5 per cent of vehicle fatalities across Canada. Collisions — safety experts don’t use the word accident anymore — are most often caused in this group by distractions such as texting and phone use, particularly if there are other kids in the car. Some 30 per cent of incidents result from alcohol. Also high on the list is collisions from marijuana use.
Speeding, lack of seat belt use, driving at night and fatigue are also common elements.
Britain’s driving data closely mirrors Ontario’s experience; 95 per cent of collisions there were caused by a poor attitude to risk.
What Ingenie seeks to do is monitor, correct and reward behaviour to change those stats. Its box device plugs into the vehicle ODB (On Board Diagnostics) port and synchs with a mobile device. The system tracks acceleration, braking, cornering, speed and other metrics.
King says because tech-savy youths tend to constantly download their driving data and respond by adapting their habits to what they learn.
“It’s not just that data,” says King. “What the system looks for is smoothness in operating a vehicle.” That’s a better measure of driving safety than just accelerating to get onto a highway once or twice or braking to avoid a taxi that is cutting off a vehicle.
“The thing about young people, especially teens, is that the frontal lobe of the brain isn’t fully formed yet,” King notes. Their evaluation of risk and control of impulse isn’t as developed. “But they can learn and we can teach them to be better drivers, unlike an adult of 45 whose driving DNA is locked in.”
King says the system has a good idea after just 65 kilometres as to the attitude and risk the driver exhibits.
“They get a score of 1 to 100 as to how they are doing and it really works,” he says. Those who drive recklessly get email messages with positive tips on lowering their scores. If the poor pattern continues, drivers may end up with a telephone counseling session with a psychologist trained in driving behaviour.
Ingenie is also looking to partner with other underwriting companies in Ontario and is looking at expanding elsewhere in Canada and the United States.
King is confident the system works, based on the 250 million miles of data its amassed. Ingenie claims its system reduces crash risk by 40 per cent and reduces dangerous driving incidents by 21 per cent among the age 16-to-24 group. Ingenie also claims a 50 per cent drop in crash risk after one year of system use.
With average insurance policies of around $3,000 in the U.K., it’s no surprise half of young drivers there are opting for a telematic-driven insurance policy. Roughly 70 per cent of them get a discount in their first year.
“I would definitely look at something like this,” responds Hoy. “My driving habits are so much better since I got my full G license and I would do anything to reduce the cost of insurance. It really sucks right now.”
Source: The Toronto Star