Sprint (NYSE:S) is getting into the insurance business–sort of. While it won’t be hiring actuaries or issuing policies, it will be supplying one of the key connectivity elements in one of the newest frontiers in auto liability: usage-based insurance. Sprint is partnering with Walsh Wireless to deliver M2M devices that can track how much, where and even how safely a car is driven–data which insurance companies can use to calculate personalized premiums.
Though not a new concept–Progressive is already issuing usage-based insurance policies in several states–M2M has the potential to revolutionize the industry by allowing insurance companies to set their rates based not on generalizations but on a specific policy holder’s driving behavior. Typically an insurance company lumps drivers into general categories of age, car type, gender, and place of residence, which are often good indicators of how a demographic group as whole would behave, but doesn’t account for the many exceptions and variations in behavior. The only personalized info an insurance company can really take into account is the number of traffic citations a driver receives. Usage-based insurance suddenly makes the world more fair to the teenager that doesn’t speed and comes to a full-stop at each stop sign or the sports car owner that only drives the product of his mid-life crisis on alternate weekends.
What’s different about the Walsh Data Logger–which plugs into the on-board computer of the car–is it monitors driver behavior in real-time, while other insurance-targeted devices tend to send out reports on a schedule. While no insurance company is discussing this yet, a real-time M2M solution could lead to the ultimate form of usage-based insurance: metered premiums. A driver could literally buy insurance by the mile, being charged a variable rate determined by any number of factors from road-conditions, time of day and even weather.
While part of me thinks of big brother, another part thinks this would be good seldom used vehicles. Like the pick up used only for weekend chores, or Grandmas car which is driven less then 20 miles per week. As long as these policies are optional this could be a good way to insure vehicles which are not used often while not being too controlling. I can almost see the data being used the same as red light cameras be over zealous localities to issue speeding tickets, etc…
See, that’s not this works, rfh. With this device and a record of safe and seldom driving, you’ll get to keep the rate you’re paying now. Other’s rates will go up. No one’s rates will go down.
Great tips.
But you can use kanetix.ca in the future and get a lot better deal.
Since I’m 22, for me it went down fom $6000/yr to $3500/yr. That’s a huge difference on my wallet. You can spend an extra $200 a month on other things you need.