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.

[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.

[Timmeh:P]

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

http://gizmodo.com/#!5793925/your-ip...ere-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

[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?