Auto Insurance Rates Based On Miles Driven & Safe Habits-The Rise of Telematics
Bloomberg Businessweek April 19, 2021 pp29 |Finance|”Insurance Premiums By The Mile” “Americans drove less in 2020, spurring many to try programs that track their time on the road” “The Bottom Line Technology has made it easy for insurers to track mileage and other driving behaviors. Those who don’t offer the option risk getting stuck with more expensive drivers”
Image not from article. Source is ims.tech.
Image not from article. Source is ims.tech Graphic explains the WIN/WIN for insurers and the insured.
Read the article for full detail
Summary by 2244
From 2016 onward U.S. vehicle miles traveled edge up toward 280 billion miles but then plunged with COVID to 160 billion on January 2021. Since then, miles traveled have increased sharply but now have plateaued at about 240 billion miles. Allstate jumped on this opportunity using it’s “Milewise” program“ which lets customers pay car insurance premiums for just the amount of driving they do.” This program was six-fold higher in 2020 versus 2019 and “there were roughly four times more policies…”. According to Mike Zaremski (Credit Suisse) comments “’The pandemic has accelerated the adoption of pay-per-mile and telematics.” Telematic refers to “devices that allow insurers to track driving behavior” and reward drivers based on miles driven and safe driving practices. Savings for the driver and Zaremski argues risk is better understood by insurers and is lower because “more driving generally means more accidents and more claims.” Insurers that don’t get on board with this newer approach run the risk of having a higher fraction of riskier drivers as customers. The Allstate program is “available in 19 states, typically uses a plug-in device to track a customer’s driving.”