Insurer offers discounts to customers running in-car GPS telemetry

Writing in PC Pro, Stewart Mitchell describes a partnership between GPS vendor TomTom and Fair Pay insurance, an auto insurer, to offer discounts to people whose GPS devices report low incidences of sudden stops and unsafe turns. I rather like this idea, the idea that your device could offer testimony on your behalf, but a lot depends on how it is implemented.

On the one hand, TomTom could generate trustworthy readings by completely locking its device so that users can't inspect or modify their operations, which would open up the possibility that your device was recording and transmitting information about your location and movements without your knowledge or permission. On the other hand, TomTom could produce a stats-gathering app whose workings were publicly disclosed, but which used a TPM-style module to verify that it hadn't been modified for the purposes of gathering and signing information that you can pass on to the insurer.

This would give TomTom owners the choice of booting their device into a known, publicly verifiable state that respected their privacy, but also produced statistics that third parties could trust. It would also give TomTom owners the choice of booting into alternative environments that did different things.

"We've dispensed with generalisations and said to our customers, if you believe you're a good driver, we'll believe you and we'll even give you the benefit up front," said Nigel Lombard of Fair Pay Insurance.

“If you think of your insurance as your car's MPG - the better you drive, the longer your fuel will last. Good drivers get more for their money and in that sense they will pay ultimately less."

Drivers on the scheme will be given a TomTom PRO 3100 as part of the package, and the device will include Active Driver Feedback and LIVE Services to warn drivers when they were cornering too sharply or braking too hard.

The TomTom will also have a LINK tracking unit fitted in their vehicles, allowing driver behaviour and habits to be monitored.

TomTom tech to set driver insurance premiums (via /.)


  1. Or how about making insurance a flat cost that everyone shares in, then socializing it so we don’t have to deal with this kind of thing at all?

      1. What bus?  Cars aren’t a luxury in most places.  Besides, creating an insurance pool that’s managed by the state isn’t making EVERYONE pay.

        As a matter of fact it’s no different than private insurance except no one skims off the top.

        1. Alternatively, we could just have a scheme where insurance companies watch our every move, then determine who was at fault in a particular accident and just bill them, while the rest of us pay nothing…

          1. And how would you make them do that? They’ll do what they do now, and charge you for being hit AND charge the guy hitting you. When you have corporations run the show, there is no limit to their greed. It’s a truism. They’re a cult that wants to expand profits infinitely, impossibly. You want to control them, pass laws. Or let a government non-profit do it – they have 1-3% admin fees while insurance companies eat, what half or more? They’re the most profitable corporations on the planet – they shuffle most of the profits off the books into subsidiaries and holding companies, so the yearly reports are a fraction of what they really make.

          1. Not necessarily ‘very well’, but better than most private for-profit corporations do, yes.

          2. Yes. They do. When you let them. And they don’t spend half of your payments paying for staff whose only job is to find a way to deny your claims. SS has about a 3% admin cost; 401Ks and IRAs absorb trillions into their pockets.  North Dakota has a state bank; they have tiny admin costs, and didn’t run the world into the ground finding more ways to steal. In every case, government (that is to say, people’s representatives) run things more cheaply and don’t regard cheating you as their highest goal. Remove the profit and remove the thieves. Thieves hate it when there’s nothing to steal.

          3.  I used to live in a community that had a municipal  cable company.  Getting cable through it was significantly less expensive than the private alternative. The quality of service was fine. The employees were paid well.  It was self-sufficient. There just wasn’t anyone making a fortune off it.   The shareholders were essentially the customers.  

    1.  Because that removes all financial incentive to drive safely, and instead of dangerous drivers shouldering the burden of claims, everyone would.  That’s how insurance in “no fault” states work and it SUCKS.

      1. Really? I mostly drive safely because (a) I don’t want to die, and (b) I don’t want to kill anyone else, and (c) I don’t want to have to go through the hassle of auto repairs. I think if (a) and (b) were insufficient for me, “financial incentives” would utterly fail to change my behavior.

        1. Culberson didn’t say ‘all incentives’, it was very specifically ‘financial incentives’ – and your own well developed sense of responsibility, certainly isn’t shared by all.

        2. The real unspoken driver of all this is simple: large number of powers – corporate, national security state, cops, government – want to install trackers in our cars. They’ll find a simple way – like this (we’ll save you money !(it won’t)), or some other  excuse, but they will soon make tracking mandatory. 
          Try putting a tracker on a cop car, tho. Or take a picture of a cop. See, the power’s all one way, theirs. We are giving up all the only real freedom America offers – freedom to move around without permission or scrutiny – for a mess of pottage. This is the final drop. Amtrak is being TSAd now – why? The last public transport system you could use – almost – to move anonymously. Used to be you could buy a ticket on board. Now you need ID or they throw you off. And a bomber (non-existent) wouldn’t think of simply placing it on the track, why? This is all about power, not about saving money or being safe. Those behind the cameras and computers will have the power, and never be subject to the tracking themselves… sigh.

    2. Because you or I would then pay for all the texting/drunk/asleep drivers that increase premiums.  I prefer to pay based on my clean record.

      1. You already do.  They create programs like this to create the (apparently convincing) illusion that you don’t.

      2. And why would they play fair like that? What possible incentive? Like cell phone companies, they move in unison. You don’t get choices. They will always raise your rates. Either dispose of them by creating public insurance or regulate the hell out of them. There ain’t no such thing as a free market.

        1. And regulation lowers cost how? In order to abide by regulations, companies have to hire people to interpret these regulations and create requirements for their IT systems, hire people to modify those systems and maintain them, and all that costs money!! No one works for free!!  Free market is created by competition. There are only so many people who’ll buy insurance and many companies offering it.  You have a choice. If you don’t like the deal you’re getting, shop around! Free market gives you that opportunity. With a government based system you don’t have choices, you get what you get. 

    3.  I’ve always wondered why insurance can’t be an individualized system, kind of like a 401k or IRA.  Obviously the insurance company would get a cut of your payments, but considering I’ve been driving for 15+ years and never been the cause of any accident I should have paid enough in by now to cover the cost of my car as it was brand new.

      1. But it’s not the cost of the car you’re covering. It’s the cost of the insurance settlement that takes place if someone breaks a fingernail.

      2. You don’t have to buy insurance through an insurance company.  You can post a bond, such as a CD that you don’t have full access to as long as it’s used for the bond.  Not many people have the money to do that though.  And, if you own a house, the extra little $ for full liability to cover your house isn’t really that much.

    4. Some states have tried a concept close to yours, and it turns out to be incredibly expensive to insure the average and safe drivers, due to the skew on the median cost of claims that occurs due to the very unsafe drivers.  In the States that have tried this type of scheme, it is called “No Fault” and “Personal Injury Protection (PIP)”.   So under this scheme, premiums actually go up for everyone to insure the smaller group of bad drivers and fraud perpetrators.

      Insurance is a simple game: price the risk.  The more an insurer can “segment” a market by identifying risk-pools, the more accurately they can price the risk (a risk pool being a number of factors that determine the statistical likelihood of you filing a claim).  If you are in a “safe” risk-pool, your insurance goes down.   Savvy insurers spends millions to mine data on their customers to understand how to segment their market.  Telemetry is just the next logical step.  You can argue that the telemetry is not a predictor for accidents, but you would be wrong.  Just like credit-score, garaging zip code, age, gender, etc. are factors that can predict risk.  To be sure, insurers are not looking to charge more with this technology, they are looking to better segment their market and identify the risk-pools that should legitimately pay more, and discount to those that should pay less by accurately viewing their risk factors.  In one major insurers’ case, they spent 2+ years testing devices like this precisely so they could determine if this was an accurate predictor.  Shocking, but those who tend to drive aggressively, tend to get in more severe accidents, meaning a higher rate of claims, meaning higher premiums for those in the segment.   Fair disclosure: I used to work for the company that pioneered aggressive market segmentation, and now work as a technology consultant in the Insurance Sector.  I have not been involved in these types of projects, but I know a shit-ton more about insurance and market segmentation than any normal human should.

      PS: One shocking fact I have learned: all those premiums that your insurer collects from your safe driving habits?  In most insurance companies 100% of the premiums (or more – up to 130% in the case of some of the majors) are paid back out in claims.  So insurers are NOT getting rich on your unused premiums, Mr. and Mrs. Safe Drivers – your premiums pay for legitimate accidents, fraud, and operating costs.  Instead, insurance companies make their profits on the INVESTMENTS of the premiums and reserves that they hold on hand.  Even the most efficient insurers pay out upwards of 96% of their premiums.

      1. Ok, so a state-run insurance company could do exactly this, except there are no shareholders who need to make a profit, so all the money coming back from those investments can go back to paying out claims and thus lower premiums.  Sounds like a good plan to me.

        1. Unfortunately the government is not well equipped to manage the aggressive investment strategies that are required to manage a Combined Ratio in the range that consumers will tolerate without significantly raising rates.  Because government entities cannot take the large investment risks that a private firm can, they will have a lower return, which will mean that premiums will have to increase to cover the slower investment returns. Insurers have return rate targets in the 20%+ range. That takes a lotta bawls to earn, and the government simply cannot play at that level and be responsible without manipulating the larger economy.

          You don’t need an experiment to see how this will work out:  Ask anyone who lived in New Jersey and insured their car in the 1990’s and early 2000’s.   NJ’s highly regulated insurance market worked a lot like you are proposing resulted in some of the highest insurance rates in the US.  If my memory is correct, they liberalized their regulations about 6 or 7 years ago, and immediately rates dropped.

      2. all those premiums that your insurer collects from your safe driving habits?  In most insurance companies 100% of the premiums (or more – up to 130% in the case of some of the majors) are paid back out in claims.  So insurers are NOT getting rich on your unused premiums

        Care to show your work for this math?

        1. No, I do not care to show MY work on this, however if you’re interested in the concept, you can do some work on your own and learn what a “Combined Ratio” is, and then look at the financials from any publicly traded Insurance company who will list their CR.   Progressive Insurance, regarded as one of the industry’s best at managing CR had a target of 96% – meaning if they spend 96 cents on a dollar earned, they are doing pretty good.  If memory serves, GEICO has gotten even better – better being some-a-where’s around 94 CR.

          1. @EH – To your question about whether CR could be manipulated: I suppose it would be conceptually possible, but to be honest, financial controls within any large insurer discourage that sort of thing.  It’s the equivalent of keeping “two sets of books”  – it would make accounting extremely difficult, and worse, hard to manage claims processes and corporate spending without committing fraud on a massively complex scale within a rather large company.  It would be like setting your alarm clock ahead, or tricking the fuel indicator on your gas tank – they’d only be hurting themselves.

            Of course, after seeing what happened at Enron, I think anything is possible, but the likelihood that this would happen at a large scale insurer with a high, favorable credit rating would be unlikely – they value their credit rating more than any additional income they could squeek out by manipulating the numbers that feed their CR.  Also, CR is well understood in the Insurance industry from an accounting perspective, so any worthwhile audit firm would see something funny pretty quickly. 

            I am no advocate for insurance companies – I just know a lot about how the sausage is made:  It’s been my experience that large insurers generally want to do the right thing (at least financially speaking ;-) – claims on the other hand…I will save claims horror stories for another day…).

  2. Progressive offers discounts if you give them the telemetry from your on-board computer.  I did it, looked at my data.   thought.  Wow this is creepy, erased it and sent them  back the gadget.

    If people really cared about this, why not have the device give you tips on driving rather than tattle on you to a corporation that can stick it in a database  and label you “unsafe” even if you don’t get in accidents.

    1. I saw the Progressive ad for this and wondered what it was. Don’t they just take one month’s sample and extrapolate from that? So, for one month you drive like an angel, but then you’re done?

      I wouldn’t do it anyway, but it seems like a system pretty open to being gamed.

      1.  I think you get an automatic discount just for trying it for a month and then its an ongoing thing it if you want to get future discounts.

      2. It’s acclimation.  Boiling the frog. They want to introduce the meme of being okay with car GPS tracking (soon with radio links) to the public. Soon it will be mandatory to continue your policy, then it’ll a law for security’s sake. Inevitable step by step. Power is it’s own excuse – they can’t NOT do this.

        1. Catbeller – I tend to agree with your concerns on this.  If you want to prevent this from happening, may I suggest you contact your state’s Insurance Regulatory Board.  Every state has it’s own government insurance regulator that must approve  the way an Insurer derives their rates and prices their risks.  15 years ago, there was a huge battle over using credit-score to price risk, but that battle was mostly lost by consumers (…because Insurers proved it was an accurate predictor of risk :-/ ).  If there is a large hue and cry over this tactic, the state boards might not allow this to happen.  And again, as much as I disagree with this approach, the flip side is government regulation of private industry innovation, which can also be a sticky balance.   As stated in my prior comments about market segmentation, in concept the only ones paying more would be those who legitimately should, due to identified risk factors.  As an admitted overly fast driver with no accidents, I love riding on the coat-tails of the more-safe drivers in my risk pool, but many would argue that’s not fair.  On the other hand, I would argue that’s the point of insurance.

  3. I don’t want to be reminded that I am braking to hard. It is usually because some blue hair pulled out in front of me when they shouldn’t have, or someone had to stop short to avoid hitting something. I don’t need another distraction during those times.

  4. Having a GPS that reports your driving stats to your insurer will eventually become mandatory. You might be able to get insurance without one, but it will cost a lot more.

    1. Exactly why this nose under the tent should be ignored by customers, to delay that day as long as possible. In thirty years of driving, I’ve had no accidents or an insurance claim filed against me. I should be paying nothing for insurance by now, but would get busted constantly by a reporting system for making hard stops and starts and going fast when it is safe and suits my mood.

      1. Not to mention the fair world fallacy – like they won’t change the rules, increasing the number of infractions yearly ’til it is impossible not to receive a penalty increase. Americans have a built-in bias that businesses are somehow fair because the market is free. Freedom for a market means freedom to collude, in actuality or just by copying the good ideas of competitors to increase rates.  GPS tracking will give them a tool, not to reward, but to punish, because that’s what they think their fiduciary duty is to their stockholders.

    2. I fear you’re correct, Mark.  All the recent trends point toward our every movement, action, conversation, and discernible mood being tracked, recorded, cross-referenced, analyzed, and used for a number of purposes both more and less innocuous than mere targeted marketing.  Why wouldn’t an insurer want actual, measurable advance data regarding the safe driving habits of the insured?  They’re in the business of making bets, and anything that improves their odds of avoiding payouts will be their highest priority.  And unless I’m completely out of my head, they have a powerful lobby that’s quite good at transforming their corporate preferences that limit their own financial risk into the law of the land.

      Actuarially speaking, this should drastically lower the premiums of genuinely safe drivers.  I’ll bet all the money in my pocket that the actual savings will be nominal at best.

      1. The Progressive thing was like “up to 15% off” or something. Not enough to justify the exercise.

      2. Actuarially speaking, this should drastically lower the premiums of genuinely safe drivers.

        Are you kidding? It’ll lower the premiums of semi-comatose drivers who ooze down the street at one mile below the speed limit, completely unaware of traffic conditions and causing other drivers to have accidents as they try to get out of their way.

        1. I dodged That Guy on the westbound 210 at Lincoln just last night.  Two other people had to perform tire-smoking swerves to avoid obliterating his ass.  Seems he thought 48mph was close enough to merging speed.

          But your larger point is right.  Telemetry tells a very slender slice of the story, especially when significantly fewer than all of the vehicles supply it.  

          AFAIC, they might as well go ahead and automate the whole driving process.  Surrendering all freedom and autonomy of movement is bad enough, but to my mind it’s an order of magnitude worse when accompanied by the illusion of freedom and autonomy.

    3. The only reason I doubt this is that, assuming it doesn’t become a regulatory thing, there’s no reason someone couldn’t start an “old school” insurance firm that just did things the way they used to be done. The costs would likely be higher than competitors using GPS, of course, but I sincerely doubt they’d be much higher than they currently are.

  5. Who gets to decide what constitutes “unsafe cornering” anyway?  If the car didn’t flip on its side, it was a safe turn, no? 
    And acidrain69 hit the mark for the hard-braking.  Had to do it Tuesday to avoid getting in a serious accident or killed by a moron that pulled out of the left-turn-only lane into the driving lane without signaling or *looking*. 

    1. If the car didn’t flip on its side, it was a safe turn, no?

      We should street race some day. I’ve been looking for an excuse to buy that neon package.

    2. The insurance company will decide. Yearly. With new notions. And they know a little secret about human nature: everyone thinks they’re a good driver. They know better, and soon, if you let them do this (and you all will), you will find out in excruciatingly expensive detail, how exactly bad they, not you, think you drive. $$$$$$$$$ forever. And they will always say it’s your own fault, and how will you deny that? Hey, you rolled 12 more inches into that stop line, buddy, that’s another demerit ka-ching…

      1. …everyone thinks they’re a good driver.

        Years of terrified, little mewling noises from the passenger seat have disabused me of that notion.

          1. I used to be terrified of driving.  And then one day, I just thought – Giant Pinball Machine.

          2. I’d pay cash money for this match race to happen.  Preferably in the L.A. Riverbed to keep fatalities to a minimum.

  6. I went through the Progressive program and found it to be painless.  Yes, it tracks when you drive, how hard you brake, that sort of thing but I found that to be acceptable.  I’m a year-round cyclist in Wisconsin and only drive distances more than 30 miles.  To me, the cost savings (and mine were substantial) outweighed any sort of privacy implication.

    Oh, you know that I brake too hard, drive 67MPH on the freeway, and occasionally get up at 3:00AM to go birdwatching?  Have fun with that data.

    Wait.. I brake too hard, only drive 67MPH on the freeway, and go BIRDWATCHING?  What the fuck has gone wrong in my life?  ;-)

    1.  It was actually Wisconsin that convinced me to avoid the program.  On the first set of data were drives through Wisconsin where the speed limit is 70.  Well according to Progressive 73mph is a death wish stunt move.  So despite only going over 60 on rare occasions the 73 meant I would get the minimum discount. 

    2. I have this too (but in MN). I save about 20% on mine. It seems that the way you drive in a Prius to achieve high MPG is rather compatible with lower insurance. It’s a win-win.

      1. Uh-oh.  It’s been three hours now.  Did awjt ask too many of the wrong type of questions?!

  7. GPS data can be used for a lot more than hard-braking and cornering. The obvious one is speed, of course. They can also see whether you happen to frequent areas with higher-than-average vehicle theft or crime rates (like, where your workplace is, or where your mom lives). They can see how far your average drive is (there are statistics that say most accidents occur close to home, for instance) Do you drive more on highways or city streets (city streets having a higher potential for accidents) And on and on.

    As the data accumulates, the number-crunchers will be able to build a finer-grained image of you and your habits. And, they will share it all with their partners.

      1. Accidents happen because automobiles are impossible to drive safely forever . Tons of metal, human judgement and perception, along with millions of other cars doing likewise. Everyone is a possible accident victim – it’s like holding two sticks of lighted dynamite and trusting that someone will put the fuses out every few minutes. Autos – killed and maimed more Americans than wars.

      2. Yes, of course. And, if your GPS data shows you do, say, 80% of your driving within a 5-mile radius of home, your insurer could use that as a reason to charge you more because of that close-to-home statistic.

        These are companies that employ armies of numbers-crunchers in order to establish all manner of implied risks. Adding GPS data of your vehicle’s movements only adds to their ability to ding you more. And, knowing corporations, it’s probably safe to say that the added data will very rarely be used to lower your rates.

  8. I’ll be captain obvious here, so everyone, strap on your tinfoil hats: who’s to say a private corporation wouldn’t just share that GPS info with law enforcement? And why wouldn’t they? It makes perfect sense for federal or state level government agencies legislatively to incentive  these schemes for insurance companies to encourage GPS “monitor safe driving”, because the implication is they then don’t have to worry about pesky warrants when needed to attach their own trackers. Eventually due to law, homogeneous rules, or market adaptation everyone will already essentially be tracked. In closing fellow tin-hatters, it is already known government agencies can ask for and get your phone tracking and intercepts, the car would just be the next logical step. 

    ** Edit, I forgot to mention that insurance companies could also then sell your driving destinations to marketers… oh look, you drive by McDonalds every day.

  9. I love their insistence that these gps trackers will save safe drivers money. What will really happen is safe drivers pay basically what they’re paying now, and the dangerous drivers will pay a whole bunch more. 

    Yes, the pilot programs are granting a nominal discount right now, but once this stuff becomes mainstream you can kiss those savings goodbye. 

    I figure it’s only a matter of time before this crap becomes mandated by law, which has me hoping that computer driven vehicles hurry their ass to market and the whole thing becomes a non-issue. 

    1. I can only imagine the McCarthy hearings in a world where every communist meeting made 4 square and every car in the area at the time could be identified.

      1. Nail on head, Shirt.  Developments like these are certainly not in the best interest of a free-willed, potentially dissenting citizenry.

  10. There are always ways to game a system. I’m thinking a fake OBD-II output from your car, shock-mounted tattle-box (possibly something that spins it too), and a very near field GPS jammer.

    But there’s also the idea that it might be mandated by the government- that way they’d only need one GPS to track your driving habits (distance, speed, turns) for both insurance rates and mileage/use-based road taxes (does speed have an effect on road wear? I’m sure a time-based congestion charge could also be implemented- don’t drive during rush hour).

    Yeah, and for data mining. I’m sure that DHS can find something incriminating with it.

  11. Does it address the issue of pokey driving below the speed limit so that everyone else makes risky lane changes to escape from being stuck behind you?

  12. How long before this is used to track down a stolen car, preferably with the perps still driving it? (Yes, I have had a car stolen and found it frustrating how little could be done about, other than waiting for it to turn up, why do you ask?) 

    Ponder the convergence of this, electronic tolling, and the libertarian fantasy of every mile of road being tolled. Should clear the roads pretty quickly. 

  13. I just feel blessed to still live in a country where I can get behind the wheel of the biggest, fastest vehicle I can afford, burn as much fossil fuel as I deem fit, drive as fast as I can get away with, even while stinking drunk, in a homicidal rage, smoke cigarettes while yelling at loved ones on my totally killer phone of the moment blasting my fav tunes at hearing damaging levels…and provided I can avoid, outrun or cozy up to Smokey: it’s all gravy, baby.

    Stick THAT in your Tomtom, Progresso. . .

    As a matter of fact…ALL you other drivers, bikers and peddy-estrians need to get the Hell out of my life is very important and I am often in a hurry to do special, necessary things.

    Your right of way ends where my bumper begins.  Deal with it.

    Unless of course your vehicle is markedly larger, (or you are) and/or you have which case I shall be as obliging as a meek and mild little lamb…’oh by all means; after You…’

  14. Two weeks with this device in my RS6 and I would be looking for a new insurance company.  Mind you I am a very courteous and safe driver- always signal lane changes, always keep to the right (quite an anomaly here in Washington State), maintain proper spacing with the vehicle in front of me etc. etc. Yet I occasionally enjoy a “hard” (smooth) corner, quick acceleration or hard braking- again always in a manner appropriate to driving conditions and courteous of others. (Full disclosure- I may occasionally give a fellow driver a close look at my bumper if they insist on CAMPING in the left lane and force me to pass on the right.)

  15. If the insurance company’s only true concern is hard braking and cornering, then a small device containing an accelerometer and flash memory is all that’s required.

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