Young Ontario drivers may soon benefit from a new program aimed at cutting vehicle insurance costs for this high risk group.
Ontario parents and their teen drivers could have some relief for the high cost of car insurance, when a variation of a Quebec program by insurer Industrial Alliance comes to Ontario. While it won’t be run by Industrial Alliance, it will be loosely based on its Mobiliz program aimed at 16-to-24-year-old drivers.
The program involves installing a small wireless device in a car’s diagnostic port, designed to measure driving behaviours such as speed, time of travel and distance, hard braking, pace of acceleration and turn speed.
In the past 18 months, the program in Quebec has reduced accident claims by this high risk group by about 40 per cent, allowing Industrial Alliance to reduce the cost these drivers pay for its insurance by an average 23 per cent.
A 20-year-old male insuring his first car typically pays around $3,000 a year in the Greater Toronto Area, so reducing that by $690 is a significant savings.
An application is before the Financial Services Commission of Ontario (FSCO), to launch such a plan. Paul-André Savoie, whose Montreal firm Baseline Telematics is working with a large insurer to launch the program, told the Toronto Star that he hopes to have approval and a product available within three to six months.
“The savings for young drivers will be substantial,” Savoie told the newspaper. “It’s going to be a game changer.”
Savoie’s company developed software that allowed Industrial Alliance to introduce Mobiliz. These telematic products measure how you drive — and the results are available to you and your insurer online.
Suzanne Michaud, a vice president of client services with Industrial Alliance, says the Mobiliz program has exceeded expectations.
“Are we happy? Yes, very much,” she said. The company is a small player in the national auto insurance market and has no plans to bring Mobiliz to Ontario.
Quebec-based Desjardins Insurance introduced a usage-based plan in Ontario last spring. Spokesman Joe Daly says one-third of eligible new customers are trying its Ajusto program and it has 40,000 people in Ontario and Quebec using it.
Daly says the average savings is 12 per cent, though the company says you can earn up to 25 per cent by exceeding all its benchmarks. Unfortunately for many GTA commuters, the scheme penalizes those who drive more than 15,000 kilometres a year. These drivers cannot earn more than a 15 per cent reduction, no matter how well they drive.
Savoie has six projects underway with Ontario insurers, including the one he hopes to see available by the spring. He says insurers are eager to explore the potential of telematics. For example, it can help them target niche markets, whether it is the worst drivers, low mileage drivers or urban vs. rural drivers.
Applying for a Mobiliz policy is easy and quick. The online form asks for your age, gender, postal code and make of car and instantly returns a quote with the monthly payment. Mobiliz price adjustments are made monthly, rather than annually upon renewal. The instant reward is a powerful incentive for young drivers on tight budgets, Savoie says. It pairs good driving with immediate saving.
The use of telematics and usage-based insurance policies is only in its infancy. A recent article on industry website Property Casualty 360 notes that the global market share of usage-based insurance has doubled in the past year. One area where insurers see potential is wearable technology devices that can monitor your heart rate and blood pressure among others.
“Health Insurance companies are starting to take a long look at this type of technology,” says Carole Beatty with SAP Canada.
Excerpted from an article by Adam Mayers in the Toronto Star
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