Concerns over Telematics
Published: May 26, 2016
Updated: July 24, 2018
Author: Luke Jones
CATEGORY: Car Insurance
Telematics devices used to monitor how a driver operates a vehicle are a compelling new addition to the insurance industry, allowing providers to offer usage based insurance coverage. The technology could spur the industry into a new era where there is a lot of uncertainty, but these telematics do not come without their share of questions that are unanswered.
Perhaps most consumers do not know that telematics devices are hardly a new concept. The technology has been around since the start of the century and many modern vehicles have little devices that record such things as speed, seatbelt use, steering patterns, and braking. The tech was developed to help manufacturers understand vehicle performance, but have been used by police to reconstruct accident scenes.
Insurance companies in other countries have no adopted similar technology to monitor drivers and offer them improved premiums based on how they drive, and how often they use the vehicle. Canada has yet to adopt this insurance model, but it is viewed positively by most and is expected to debut in the country soon.
However, CBC News has raised some questions regarding telematics devices, based on data event recorders (essentially the same thing) from several fatal collisions. Looking at five fatal accidents in Halifax last year show less than clear results, prompting the Automobile Protection Association and Canadian Automobile Association to seek clear rules regarding telematics.
Privacy remains the chief concern of telematics devices and could be the biggest hurdle to convincing consumers to adopt telematics in market changing numbers.
"There are significant privacy concerns. First of all, your car is basically monitoring itself and to some degree monitoring your behavior but you don't know it, unless you are told," said George Iny, the director of the Automobile Protection Association.
"I think the basic rule should be that you own your data and if someone is collecting it — even if it's with your consent — that they have to do it within certain parameters."
Manufacturers are legally obliged to tell customers that a vehicle is fitted with a data recorder, but there is no ruling saying how or where companies should place this notice. This means the information is typically buried deep within a user manual. Iny argues that manufacturers should be more upfront about such technology.
Insurance companies will face no such issues as they would be clear about the type of policy being offered, one which is based on being monitored. One worry is that there is no way to tell who is driving the vehicle, which has led to some US based insurance companies promoting a system where cameras are placed in the vehicle.
This is likely to lead to widespread outrage and cause even more concerns over privacy. So while telematics present an intriguing new horizon for the Canadian auto insurance industry, there is still much to be cleared up.