Usage based insurance

[p.dath]

I came across something recent which I had never heard of - usage based insurance. Apparently it seems quite big in the US and Europe.
http://en.wikipedia.org/wiki/Usage-based_insurance

Basically the idea is you give up a little bit of a privacy and the insurance company fits a monitoring device to the bike/car being insured. You then get an account a bit like a pre-pay phone. You put money in it, and insuance gets deducted based on your usage.
Many of the companies simply charge by kilometres driven. If you you don't drive/ride much, your insurance is much cheaper. This could be a great option for those that have a second road bike/car, etc.

Now I mentioned that word privacy. Some of the devices can also monitor the way you drive/ride, and the insurance charges vary based on this. Some also include a GPS, and the charge can also vary based on the time of the day and where you take the bike/car. Those that accelerate/brake hard could be charged more than those that go gently, as well. It's up to the insurer offering the policy as to what weightings they want to put on what factors.
And the insurance is charged for weekly/monthly, rather than annually.

I'm happy with the business model, in that no one is forced to take up the insurance. They can optionally trade some privacy for much lower insurance costs.

But boy, it still rings the "big brother" bell big time in my head.

If an insurance company introduced such an option in NZ, and assuming it was at least 30% cheaper than standard insurance (based on overseas examples), would you take it up?

[Oblivion]

I came across something recent which I had never heard of - usage based insurance. Apparently it seems quite big in the US and Europe.
http://en.wikipedia.org/wiki/Usage-based_insurance

Basically the idea is you give up a little bit of a privacy and the insurance company fits a monitoring device to the bike/car being insured. You then get an account a bit like a pre-pay phone. You put money in it, and insuance gets deducted based on your usage.
Many of the companies simply charge by kilometres driven. If you you don't drive/ride much, your insurance is much cheaper. This could be a great option for those that have a second road bike/car, etc.

Now I mentioned that word privacy. Some of the devices can also monitor the way you drive/ride, and the insurance charges vary based on this. Some also include a GPS, and the charge can also vary based on the time of the day and where you take the bike/car. Those that accelerate/brake hard could be charged more than those that go gently, as well. It's up to the insurer offering the policy as to what weightings they want to put on what factors.
And the insurance is charged for weekly/monthly, rather than annually.

I'm happy with the business model, in that no one is forced to take up the insurance. They can optionally trade some privacy for much lower insurance costs.

But boy, it still rings the "big brother" bell big time in my head.

If an insurance company introduced such an option in NZ, and assuming it was at least 30% cheaper than standard insurance (based on overseas examples), would you take it up?

I think that it would be hard to monitor this kind of thing, and if they did, it would be expensive to set up a monitoring network. I love the idea, I just think its a little too ambitious for a country like ours.

If it was made avaliable, then I would be one of the first to join. :yes:

[p.dath]

I think that it would be hard to monitor this kind of thing, and if they did, it would be expensive to set up a monitoring network.

The mostly use the cellular 3G network - so that is already in place in NZ. And monitoring it with a GPS equipped device would be easy - they are already doing it on a large scale in the US and Europe.

[bogan]

Is this for vehicle insurance or health insurance as well?

An interesting concept, sounds pretty tamper proof too. However the equipment and admin cost of such a system means that it will cost more in total, who will foot the bill if only those who get it cheaper will opt in to it?

[Oblivion]

Is this for vehicle insurance or health insurance as well?

An interesting concept, sounds pretty tamper proof too. However the equipment and admin cost of such a system means that it will cost more in total, who will foot the bill if only those who get it cheaper will opt in to it?

For such a small population the cost will just be too great. That's why it works so well in the USA, and Europe.

[Blackshear]

30% is not worth my privacy, fun and future favourite routes.
:sunny:

[Timmeh:P]

Don't need to install anything on the bike, just use your Iphone or android phone.

http://gizmodo.com/#!5793925/your-iphone-is-secretly-tracking-everywhere-youve-been

[p.dath]

Is this for vehicle insurance or health insurance as well?

An interesting concept, sounds pretty tamper proof too. However the equipment and admin cost of such a system means that it will cost more in total, who will foot the bill if only those who get it cheaper will opt in to it?

It is not for health insurance.

The widespread overseas deployment of this type of insurance would suggest that it does not cost more.

Who will foot the bill for those that don't opt in? Well, those who don't opt in, of course. :-)

Insurance is currently based on averages. I expect those people of below average risk would be drawn to this system because of the lower cost. That would mean the average risk of everyone left would rise - and hence the cost to that group.

[DR650gary]

I currently pay less than $500 per year for a $14,000 bike. I am a broker in the industry but that is not a discounted price. I don't regard that as unreasonable. Perhaps the premiums overseas are vastly higher, which allows room for discounted schemes. I have read on other o/seas forums some postings on fairly horrendous premiums by our standards.

From my experience, premiums for conservative riders here in NZ are low by international standards. There is room for improvement but as pointed out already, we are a small market which does not spread base costs very well.

Cheers

[zaq]

I'd have it in a flash if it was much cheaper, and if there was cap on the max price.

[slofox]

Those that accelerate/brake hard could be charged more than those that go gently, as well.

Sod that for a game of soldiers...

[bogan]

It is not for health insurance.

The widespread overseas deployment of this type of insurance would suggest that it does not cost more.

Who will foot the bill for those that don't opt in? Well, those who don't opt in, of course. :-)

Insurance is currently based on averages. I expect those people of below average risk would be drawn to this system because of the lower cost. That would mean the average risk of everyone left would rise - and hence the cost to that group.

Who will foot the bill for the equipment cost and admin overheads for the monitored system is what I meant. I guess you could work it so that part of the savings due to decreased 'risk' go to these costs first, then the remainder get passed to the customers. Or just chuck it onto everyones as general admin.

Also, I think the km based is something that looks good on paper, but I'm not sure if it would be as effective in practice. Town commuting is far more dangerous per km than open road stuff in my experience. Also inattentive vs attentive road users would still be lumped together.

Personally I like the idea of flat rate insurance anyway, which may sway my interpretation :innocent:

[Mental Trousers]

I'd be into that. Paying for exactly what I use is fine by me.

A side benefit is if your car gets stolen there's a good chance the insurance company can track it.

[davebullet]

Most insurers have that option. Although a cruder form - they have an upto X kms and over X kms premiums.

If you are a low mileage rider - ask your broker or insurer whether they have a low km extension / clause and associated premium reduction.

[Spearfish]

The mostly use the cellular 3G network - so that is already in place in NZ. And monitoring it with a GPS equipped device would be easy - they are already doing it on a large scale in the US and Europe.

Trucks, taxis and buses are monitored, some employers are fitting tracking gear to work vans: eg telecom, couriers.....some alarms use the 3g network to notify the owner

Just thinking the police could obtain a warrant like cell phones and the logged information could be part of an investigation great if your bike has been stolen, probably not so great if the odd hoon is part of a good day out.
Could the insurance companies deny a claim or even vary your level of risk and charge accordingly based on the real time gps data that was logged against the bike?

[cbgb]

But boy, it still rings the "big brother" bell big time in my head.

mine's a gong and dinner is SERVED.

fuuuuuck that. Next up - power company sticks a camera on my ass and monitors my shower usage.

[swbarnett]

would you take it up?
Hell no!



10 char

[Smifffy]

What about the argument that those who ride less often are less experienced/skilled and therefore more prone to expensive insurance claims?

The fundamental problem with insurance is that it is reliant on statistics. The fundamental problem with statistics is that they are open to interpretation.

The person who claims to ride 100,000 kms a year and is safer on the road than the guy who rides 3,000 kms a year may well be right.

A danage incurring event (as opposed to an accident) is not necessarily random.

Just ask Katman.

[warewolf]

If an insurance company introduced such an option in NZ, and assuming it was at least 30% cheaper than standard insurance (based on overseas examples), would you take it up?Sort of. As mentioned before, it's already available here and I'm on it. Low mileage discount through John Baker insurance.


The person who claims to ride 100,000 kms a year and is safer on the road than the guy who rides 3,000 kms a year may well be right.The higher-km rider is safer per km, but exposure is greater which leads to higher risk. However that ignores riding style, which probably has more influence. What about a rider who used to ride 100,000km per year, but now doesn't? If they apply their experience then they'd be a fairly low risk.

The most at-risk road user, on both distance and time basis, is said to be the not so humble pedestrian.

[jafar]

I like the idea of being able to track where a thief has taken my bike if stolen. Or bring able to track where I have been via the GPS. :yes:
I'm not so keen on the idea of a third party such as an insurance company having control of the data. It is a very small step from that to the police having access to the same information & writing tickets against you based on what the GPS has told them. :shutup:

[p.dath]

Also, I think the km based is something that looks good on paper, but I'm not sure if it would be as effective in practice. Town commuting is far more dangerous per km than open road stuff in my experience. Also inattentive vs attentive road users would still be lumped together.

Some of the insurers were using GPS tracking. They can tell weather your km's are around town or on the open road.


The person who claims to ride 100,000 kms a year and is safer on the road than the guy who rides 3,000 kms a year may well be right.

I guess an insurer could argue that no matter how safe you are, the more you use the road the greater the risk of someone else having an accident with you ...

[bogan]

The fundamental problem with insurance is that it is reliant on statistics. The fundamental problem with statistics is that they are open to interpretation.

Indeed, and the more in-depth the interpretation, the greater the errors can be. Another thing to ponder, if insurance is able to gather vast amounts of data, and processing capability (talking sci-fi hypotheticals now), they could predict almost down to a person who will have accidents or not, so they would get massive bills while the rest get very little at all, basically removing the benefits of insurance altogether. Where should the line be drawn?

[avgas]

@ 30% cheaper.
NO WAY IN HELL

@ 80% cheaper it would be worth my time.

Some food for thought. WAAAAAY back in 1999 my 3rd party insurance (for any motorbike) was $19 / year
I was only 19 years old (i think I fail at maths), and I was on my learners. Admittedly my excess was a whopping $1500. But still $20 3rd party cover. I can't even get a ACC brochure for that price now days. And that was only 12 years ago.

[Smifffy]

As long as it doesn't get like that burglar alarm scam a while back.

Get cheaper premiums if you fit an approved burglar alarm. Forget to set it? Not covered.

"I'm sorry sir you were insured for 10,000 kms a year, and the assessor has found that you had actually travelled 10,020 km when you had your accident. Even though the Desert road was closed and you had to travel via Napier you should have called our 0800 number and bought the additional block of 5000 kms at the low low rate of half a nutsac."

[Hitcher]

I think that this would be really expensive. Most cover at the moment is based on general actuarial risk calculations that are based on a large biker population which includes those who travel big distances and those who don't; those who fall off, break their bikes and themselves; and those who get their bikes nicked or munted by others in the viscinity. Things like the purchase prices of bikes and replacement parts are also allowed for.

Even though owning a Harley or other thievable bike worth lots of money is calculated specifically from a bunch of risk tables, for most other things a whole lot of averaging goes on.

The biggest losers are riders whose biggest risk is rust -- those who own pre-2005-year bikes with less than 5,000km on the clock and who think that bikes are worn out once the 20,000km figure is reached. I love people like this, because they are subsidising my insurance.

If I was to pay insurance based on usage (average of 30,000km a year) I'd be hammered, as many bike-related accident figures are based on offs per 1,000km, and I'm more likely to have more of these in any given year than somebody who spends money on a plug-in battery charger does.

[ckai]

What about the argument that those who ride less often are less experienced/skilled and therefore more prone to expensive insurance claims?

The fundamental problem with insurance is that it is reliant on statistics. The fundamental problem with statistics is that they are open to interpretation.

The person who claims to ride 100,000 kms a year and is safer on the road than the guy who rides 3,000 kms a year may well be right.

A danage incurring event (as opposed to an accident) is not necessarily random.

Just ask Katman.

high k's travelled doesn't always mean high good experience. Someone could be a freak and an absolute natural so after, say 3000km they're more of a riding/driving god then someone that has travelled 500,000 kms with their eyes closed hitting every car on the way. They could also be a BMW owner and never choose the option of indicators for their car ;)

Yes, there is an argument and general rule of thumb that the more kms you do the more experienced you are but the line insurance companies take in that you are more exposed to danger with higher k's is more accurate and almost fairer.

A similar argument would be 2 riders both travelled 5000km. One extensively trained, the other not. You can bet the trained rider has light years more "experience".

I have insurance for travelling under 5000kms per year. It gets me a 10% discount. It's not actually that much but I am still saving 10% because I only bring the bike out when I have time.

I think when you get into a crazy complex model like assessing rider behaviour, roads travelled, times travelled, the potential savings are only going to be realised by a VERY small minority. It's just too petty really and the statistical analysis cost to work that sort of thing out would take years to recoup (and be inaccurate :))

[Gremlin]

As some have said, it sort of exists in the form of classic cover, if you do 5000km or less in a year... uh... I can do that in under a month.

I don't think it would work for me... I do about 45,000km a year, and my bike is just being repaired after damaging it to the tune of $18,500.

I do wish however, they would bear in mind I did 90,000km since my last incident, not 2 years :facepalm:

[Hitcher]

I do wish however, they would bear in mind I did 90,000km since my last incident, not 2 years

Hah! Good luck with that.

[swbarnett]

The higher-km rider is safer per km, but exposure is greater which leads to higher risk.
Only if the "safer due to more km" is completely offset by the "more exposure".

For example, someone who rides 100,000km annually but has a tenth of the risk per km (due to experience) than someone that rides 15,000km annually is safer overall.

[Hitcher]

Only if the "safer due to more km" is completely offset by the "more exposure".

For example, someone who rides 100,000km annually but has a tenth of the risk per km (due to experience) than someone that rides 15,000km annually is safer overall.

Yes, but they still do this in the same year. No difference in risk whatsoever from an insurer's point of view.

[swbarnett]

Yes, but they still do this in the same year. No difference in risk whatsoever from an insurer's point of view.
I know, the actual risk may be lower but the insurancies companies don't care. All they see are numbers, not how good a rider you may or may not be.

Neither should they care about any aspect of an individual's risk profile. The purest form of insurance that exists is in the Amish communities and the like. Their is no insurance in the modern sence but if a barn burns down the entire community gives what they can to rebuild it at almost no cost to the owner.

[superman]

@ 30% cheaper.
NO WAY IN HELL

@ 80% cheaper it would be worth my time.

Some food for thought. WAAAAAY back in 1999 my 3rd party insurance (for any motorbike) was $19 / year
I was only 19 years old (i think I fail at maths), and I was on my learners. Admittedly my excess was a whopping $1500. But still $20 3rd party cover. I can't even get a ACC brochure for that price now days. And that was only 12 years ago.

Mines $45 per year 3rd party cover. As a 19 year old male I was pretty happy :bleh: be interesting to see what that changes to when I eventually upgrade the cc rating in a year or so. And my excess is $800! So good deals are still around, just got to look.

[pritch]

Having done close on 10,000 Ks in the last three months I don't currently find usage based policies an attractive proposition. Funny that... :whistle:

[Gremlin]

Having done close on 10,000 Ks in the last three months I don't currently find usage based policies an attractive proposition. Funny that... :whistle:
hmmm. I agree. 10k in 1.5 months when I first bought the bike. Then a slight woopsy :facepalm:

Last 2 months I've barely seen it... usage would work well for that :crybaby:

[Smifffy]

hmmm. I agree. 10k in 1.5 months when I first bought the bike. Then a slight woopsy :facepalm:

Last 2 months I've barely seen it... usage would work well for that :crybaby:

Is it still off the road? I thought the damage was not so bad?

[Gremlin]

Is it still off the road? I thought the damage was not so bad?
Needs to be actually IN the workshop to get the stuff fitted... they're trying to clear a backlog of work for which they will actually be paid this month. Mine is apparently up next week... they estimate 3 days putting it back together...

funny... only took me a few secs to pull apart :whistle:

[celtickiwi]

couple of things to take into consideration
1 insurance is COMPULSARY in the uk and many parts of europe,i.e if you drive you must have it if you want to stay legal....and insurance companies know this$$$$$

2 does someone that only does 5000 kms a year compared to someone that does 50000kms a year automatically become less of a risk because they do less miles,some might argue they are also less experienced.

3 insurance companies WILL use the data available to them to wriggle out of a claim if they can prove you were breaking the law.

[p.dath]

2 does someone that only does 5000 kms a year compared to someone that does 50000kms a year automatically become less of a risk because they do less miles,some might argue they are also less experienced.

Pretty much, yes. There is not only the risk they themselves pose, but the risk they are exposed to simply by being on a public road.


3 insurance companies WILL use the data available to them to wriggle out of a claim if they can prove you were breaking the law.

Probably easier to choose not to deliberately break the law?

Remember, the law pretty much says an insurance claim cant be declined unless the "broken law" contributed to the cause of the accident.

[bogan]

Pretty much, yes. There is not only the risk they themselves pose, but the risk they are exposed to simply by being on a public road.

An experienced rider is more likely to reduce the risk they are exposed to as well. Are the km allowances sold in flat rate or is the first 5000km more expensive than than the 20000-25000km block?

[p.dath]

An experienced rider is more likely to reduce the risk they are exposed to as well. Are the km allowances sold in flat rate or is the first 5000km more expensive than than the 20000-25000km block?

As I understand it, you put $x into your account. The insurer might for example charge you:

* $a/km between 8am and 10pm, $b/km at other times
* 10% additional when travelling in an urban area
* 10% additional if regularly accelerating or braking more than y 'G's.

You get the idea? The insurer publishes a rate card, and your fee varies on how you use the vehicle/bike. Different insurers have different rate cards. Some only charge on distance. Some charge on other factors.

[Smifffy]

As I understand it, you put $x into your account. The insurer might for example charge you:

* $a/km between 8am and 10pm, $b/km at other times
* 10% additional when travelling in an urban area
* 10% additional if regularly accelerating or braking more than y 'G's.

You get the idea? The insurer publishes a rate card, and your fee varies on how you use the vehicle/bike. Different insurers have different rate cards. Some only charge on distance. Some charge on other factors.

I probably wouldn't buy it.

[Little Miss Trouble]

I came across something recent which I had never heard of - usage based insurance. Apparently it seems quite big in the US and Europe.
http://en.wikipedia.org/wiki/Usage-based_insurance

Basically the idea is you give up a little bit of a privacy and the insurance company fits a monitoring device to the bike/car being insured. You then get an account a bit like a pre-pay phone. You put money in it, and insuance gets deducted based on your usage.
Many of the companies simply charge by kilometres driven. If you you don't drive/ride much, your insurance is much cheaper. This could be a great option for those that have a second road bike/car, etc.

Now I mentioned that word privacy. Some of the devices can also monitor the way you drive/ride, and the insurance charges vary based on this. Some also include a GPS, and the charge can also vary based on the time of the day and where you take the bike/car. Those that accelerate/brake hard could be charged more than those that go gently, as well. It's up to the insurer offering the policy as to what weightings they want to put on what factors.
And the insurance is charged for weekly/monthly, rather than annually.


Apart from valuing my privacy way too much to buy into any such scheme that monitors where and when I chose to ride, I ride a 120hp fucking sprotsbike, spirited riding is why I brought the damned thing!

[skinman]

and if like me you ride every day clocking up 260km per week minimum the bill would horrible compared to someone who only rode on the occasional fine day even if they had a 200hp monster & rode it like rossi

[rocketman1]

[QUOTE=p.dath;1130045773]I came across something recent which I had never heard of - usage based insurance. Apparently it seems quite big in the US and Europe.
http://en.wikipedia.org/wiki/Usage-based_insurance

I can see the cops getting onto this and 20 years down the track it will be compulsory on all bikes, speed anywhere any you will receive an automatic ticket in the mail. Big brother will be watching and one day I'm sure it will happen.
That's bureaucracy
Don't invite it.