A new survey found only 15 percent of motorists between ages 18 and 29 said privacy concerns would prevent them from signing up for a relatively new kind of
insurance that tracks some data that details driving habits. That’s less than half of the 31 percent who harbored concerns only one year earlier.
«That’s really telling,» said Laura Adams, a senior insurance analyst at Bankrate. «They’re comfortable giving up privacy in return for getting something.»
In return for providing data on their driving habits, motorists can earn discounts that, at least in some cases, can save them as much as 30 percent off their premiums. A growing number of insurers are offering such programs, often called either usage-based insurance or pay-as-you-drive insurance.
Such programs are attractive to insurers because they can more precisely discern risk from driver-behavior data than the traditional method of analyzing factors like age, gender and zip code; Progressive says its accuracy in predicting driver behavior is more than twice as accurate with driver-behavior data.
But some drivers are concerned about sharing data that tracks detailed driving behavior. Younger drivers, who have grown up in an age of sharing personal information on social media, are more comfortable sharing that data. Older counterparts don’t share their enthusiasm.
Twenty-seven percent of motorists between ages 50 and 64 tell
insurancequotes.com that privacy concerns would stop them from enrolling in such a program, a percentage that hasn’t changed at all over the past year. Overall, the number of drivers concerned about their sharing their data fell from 25 to 20 percent year over year.
Privacy concerns were the second-most cited reason that motorists of all ages said they would avoid usage-based insurance programs. The top overall concern: 26 percent of respondents told insurancequotes.com, «I don’t know how it works.»
The Skinny On Usage-Based Insurance
Depending on the insurer, companies can collect data via onboard infotainment units or from devices that plug into OBD ports. Some insurers collect basic information like time of day and distance traveled, while some are more comprehensive, gathering data on how quickly drivers accelerate, location data and
braking behavior. In some states, laws that regulate the insurance industry prevent insurers from gathering certain types of data. (A
brand-by-brand look at various programs can be found here).
Companies like Progressive and State Farm, have offered usage-based insurance for about six years. Progressive says it has more than 2 million customers enrolled in its Snapshot program, and a spokesperson says participation has grown «steadily.» But overall, the programs are struggling to gain a foothold with consumers. Industry estimates say less than 1 percent of insured motorists are enrolled in these programs. More than half of the motorists surveyed by insurancequotes.com say they are not interested.
As it becomes easier for automakers and insurers to collect data – and offer discounts to safe drivers – there’s ample room for growth. «It’s an untapped product,» Adams said. «It has not hit the masses yet. I think it will eventually, but we’re a long way away.»
Right now, insurers who offer pay-as-you-drive insurance programs all say they offer incentives for good driving behavior; none slap drivers with penalties if they turn out to be crummy drivers. In the future, Kelley Blue Book senior analyst Karl Brauer says that could change sometime in the next five years.
«We could see insurance companies require it before you’re on their policy,» he said.
Cars Create Reams Of Data
For motorists worried about being tracked, those concerns may already be a moot point. Whether it’s used for insurance purposes or not, data is already streaming off millions of newer cars. From now-mandatory black boxes under the hood to turn-by-turn directions available on most infotainment systems, automakers have the ability to track driver data in any number of categories. In some cases, they sell that data to third parties.
Last year, a Government Accountability Office report said automakers needed to be more transparent in how they handle customer data and
AAA, the nation’s largest motoring organization,
called on car companies to adopt a consumers’ bill of rights that outlined how data is treated.
It’s possible those concerns have fallen on deaf ears. At the CES last week, Kelley Blue Book analyst Akshay Anand said one automaker touted its ability to gather such specific data that it can analyze what radio stations drivers are listening to at given speeds.
«OEMs are doing crazy, crazy analytics,» he said. «They will start to use that in a much smarter way. … Most of it will be internal.»