SUMMER IS HERE, AND FOR A LOT OF PEOPLE....THAT MEANS INSURANCE RENEWAL TIME!

Your standard 12 month automobile policy is over, and if you're paying attention you may have noticed a bump in the costs. 

The fundamental idea of insurance pricing is that it's based on the RESULTS OF EVERYONE...
not just YOU.

We all chip into the pot, and the pot is there for those who need it. 
YES every household's ante is different based on their situation but that's the general plan. 

Each year insurer's rely on last year's information to help them predict what next year should cost.

Premium increases are achieved PROVINCE WIDE, but they don't land evenly on every customer. The prices for INDIVIDUALS are so broken up that it's challenging to wrap your head around.  

Here's an Example:
Company A gets an approved 10% premium increase for 2018. 
Perhaps before ANALYTICS showed up to the party that 10% just went right on the top and everyone paid more.
*This was before my time, but I'd be interested to know if it really was that basic.  

TODAY...that 10% gets spread around all over the place.
Companies are focused on figuring out which SUB-SEGMENTS of insureds NEED that 10% the most. Perhaps young drivers are 'under performing' and so are people who drive Volkswagens, and people within 5 blocks of a liquor store.
Of course I'm making these up as I go, but those all seem totally possible to me as examples.

Whether you see an increase this year is related to your policy containing any of those INDIVIDUAL RATING VARIABLES. The more of those characteristics they're targeting that you have...the more of an increase you see. 

#3 - Inflation. 
It's easy to forget since years go by so fast these days, but inflation is happening and insurance is no exception. This factor alone....and by itself would be a justified increase in my opinion. 

​Honestly I struggle to imagine premiums ever decreasing in my lifetime.
Make peace with the fact that the cost will slowly rise over time like all goods and services.

Suck all the value you can out of a good relationship with a broker. 
Let them make sure you're with the ideal company for your circumstances, and that you have access to expertise when you need it. 

You're paying every year, so at least buy something you feel good about.  

​MD

'Telematics' as they relate to insurance refers to information being collected on drivers and policy holders when they're using their vehicle. Typically you plug in a little device to your cars computer and it tracks the basic operations of the vehicle for a set period of time.

Different companies track slightly different actions but in general the metrics are around:

How fast you drive. 
Frequency of sudden braking events. 
What time of day you're travelling.  

I get it. It feels like a bad idea immediately. 
​But let's hear it out. 

1) For being a willing participant you get an immediate discount on your auto premium. Often 10-15%.
That's an easy $100 or more for the average driver in Nova Scotia. 

2) The data collection happens only ONCE and lasts for usually a 6 to 9 month period. So we're not talking about monitoring your cars forever...it's not even for one year. 

3) *QUALIFYING* drivers are eligible for up to 30% off their premium the next year.

Note the word QUALIFYING. 
You can't drive like Cal Naughton Jr and expect to cash in the following year.

4) THEY WON'T USE YOUR DATA AGAINST YOU.
There is a strict code of conduct around what is being tracked, and what that data can be used for.
None of it can be used against a policy holder for underwriting or claims purposes so you can set aside the paranoia. 

5) It may actually improve your driving habits.
Insurer's believe that by being more conscious of how you're driving you'll develop learned behaviors that stick with you.

Once you stop all the speeding for the 6 months to pass this test, you may realize you don't actually need to speed. Whaaaaat?

Intact Insurance is one carrier on the front line of this stuff. They use an app on your phone to do the heavy lifting for tracking the data, and as a teaching tool so you can see how you're doing.

Click on the app after a drive, and you can see the details of the drive on a  map right down to where you had to jam on the brakes.

Yes. We're inching closer to the beginning of a Black Mirror episode. 

But aren't we already kind of there with technology? 

If you're willing to bank online (which I LOVE) then what's the worst thing that can happen to your 'sudden braking history' from your Nissan? 

1) It doesn't cost me anything.
In fact...my insurer is offering me 150 bucks off the cost of the policy just to participate this year, and the possibility of doubling that money NEXT year.

2) I have the cheat sheet to this test. 
Don't speed over 120 if possible, avoid hard braking situations, and try not to drive between 11am-4:30am. If my lifestyle makes the above achievable why not try and collect some more discounts?

3) Even if I fail the test horribly because I 'live my life a quarter mile at a time'  the guarantee of not being rated on the data makes it a fair trade for the upfront discounts in a lot of cases. 

4) It's fun anytime you have a chance to try and 'beat the system'.
​ 
5) I may actually develop some better driving habits. I haven't had a driving test in like 20 years and while I THINK I'm the greatest it's fair to say that everyone could benefit from an occasional refresher on best practices. 

All I'm saying is that before we all get out the torches and pitchforks against telematics let's make sure we have all the facts.

Talk with your broker about which companies monitor what, and if you're a good candidate for them. They're not going to be EVERYONE'S best option, but if you're at all competitive and enjoy saving money it can be a pretty good offer. 
  
Maybe if insurers connected all the data to a giant leaderboard and put some prizes and hype around it people would actually get into it.
I know a few people who'd be into competing purely for bragging rights.
​Oh and discounts/prizes.

​MD