In early January, just weeks before Victoria revealed plans to shift the Insurance Corp. of British Columbia (ICBC) to no-fault-style insurance, 2,100 new drivers took to the roads with tiny devices tucked between their windshields and rear-view mirrors.
Since then, the “Smart Tag” sensors have been collecting data on everything from drivers’ vehicle acceleration and braking habits to smartphone use while behind the wheel.
At the same time a paradigm shift is unfolding for the auto insurance industry, ICBC’s yearlong telematics pilot will be examining whether a mix of incentives, information sharing and technology can improve driver behaviour and reduce crashes.
“Anything that scientists can do to better understand what factors affect crashes is good, is useful,” said Todd Litman, executive director of the Victoria Transport Policy Institute.
The voluntary pilot requires drivers to download a mobile app and attach the Smart Tag provided by vendor Octo Telematics North America LLC.
The app and Smart Tag feature a GPS, accelerometer and gyroscope to collect data on driving habits.
Participants – those with four years’ experience or less – are divided into two groups: one receives weekly reports on their driving habits; the other will not find out their results until the 12-month pilot ends.
The first group will receive scores based on acceleration, speeding, braking and distance driven as well as any distracted driving that’s detected.
Litman said even just increased awareness about one’s own habits can change drivers’ behaviour.
As part of the pilot, ICBC is offering participants up to $250 in gift cards.
The better a driver performs, the more he or she can earn.
In other provinces, the telematics technology is permitted to be used as a tool to offer discounts for good driving but not to hike rates.
However, there has been hesitancy to adopt the technology in other parts of Canada.
A 2018 report from management consulting firm McKinsey & Co. revealed that telematics had a 20% penetration rate in the U.S. market compared with only 4% in Canada.
A 2014 Deloitte report concluded that widespread consumer acceptance of the concept does not necessarily guarantee trust in the technology, given privacy concerns and risks posed by hackers.
“Depending on the details of technology such as what data it collects and how they’re stored, the privacy concerns could be significant,” Litman said. “Politically, just as a practical matter, it would need to be an optional approach.”
Instead, he’s advocating a pay-as-you-drive insurance model that provides an incentive to reduce a driver’s road time by basing premiums directly on mileage verified by brokers.
Higher-risk drivers pay more under this model, which Litman said could help reduce the number of accidents if those drivers have an incentive to get off the road.
This model was introduced in Ontario in 2018 and has been tested in Australia and New Zealand, among other jurisdictions.
“When people shift from insurance being a fixed cost to a variable cost, they have a new opportunity to save money. One of the big benefits is that it increases affordability, so it’s very good, especially for low-income people, to be able to pay as you drive so you’re rewarded every time you reduce your mileage.”
Litman added that telematic insurance could do the same, but it would be more complicated and costly.
“Because it [pay-as-you-drive] could be applied broadly, there’s none of the privacy concerns.”
ICBC, meanwhile, acknowledged in a May 2019 privacy impact assessment that those concerns would have to be addressed.
The insurer said location data used in its telematics pilot would be collected by vendor Octo and deleted at two out of three of its data centres within seven days of receiving it.
The third data centre would de-identify the data after seven days, and then permanently delete the data at the end of the pilot.
ICBC, however, will retain the data for eight years for research purposes.
Octo, meanwhile, will not pass any GPS data on to the insurer, and ICBC would not turn over the data to police for the purpose of issuing a violation ticket.
Litman said that regardless of what insurance model the province adopts, B.C. drivers need to start thinking of transportation more holistically.
“Accidents, and congestion and air pollution and the high cost to households of owning and operating a vehicle, they result from many of the same policies and can be reduced by many of the same policy reforms,” Litman said.
