Thursday 28th February 2013

PH Investigates: black box insurance

'The price of freedom' says one provider of telematics insurance - one we're willing to pay though?

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News last week that Citroen's C1 will be offered with free insurance to young drivers with a standard-fit 'black box' telematics recorder certainly got tongues wagging on PH. Deservedly so too. Much as we may worry about technology interfering with our love of driving nothing strikes at the heart of that more than the idea that live data about when, where and how we drive could be used to calculate our insurance premium.

Want cheaper insurance? Don't drive a Saab!

Autosaint, a provider of telematics insurance, boasts somewhat ominously on its homepage that this is 'the price of freedom' and for many younger drivers this may well be the reality. But before those of us with years of no-claims and affordable cover on whatever car we fancy get too smug, we need to consider how long it'll be before such policies become more widespread.

Telematics insurance was launched into the mainstream in 2006 by Aviva, again aimed at lowering costs for younger drivers by offering a PAYD (Pay As You Drive) scheme based on how much and when you drove. But it didn't last long. "Lower than expected take up, high technology costs and a market with much cheaper premiums than today significantly weakened the commercial viability of the previous product," an Aviva spokesperson told us. "The PAYD product allowed us to really understand driving behaviour and identify very accurately the risk profiling at an individual customer level. In addition we also learned why the product was not appealing to the 'mass market'."

Aviva has learned from the experience and is now looking at launching a more limited app-based policy that records your driving for a fixed period, from which your premium is then calculated. "Technology has developed significantly since then," said our spokesperson, "as well as consumer awareness and acceptance of usage based insurance offerings."

Go Compare now includes telematics policies

This app-based system is clearly less intrusive and takes some of the sting out of the Big Brother concerns many have about telematics insurance. But this hasn't stopped others. Go Compare is now putting its weight behind telematics insurance, including eight providers in a new telematics-specific comparison screen that lets you weigh up prices against 'regular' policies. Go Compare's head of motor services Scott Kelly says nearly a third of drivers are currently unaware of telematics insurance and the potential savings, but reckons a fifth could switch to such policies in the next five years.

"The tipping point, where telematics policies gain real mass market appeal, is yet to come," he says. "But as the technology matures and becomes more readily available and as understanding grows, telematics-based policies could prove to be one of the most important developments in the car insurance industry."

Our story on the C1's black box offering attracted over 300 comments, many with serious concerns about the system's ability to 'mark' your driving and penalise you on future premiums on the basis of harsh acceleration, cornering or braking; the latter, in particular, a cause of much concern among PHers. Does that mean, for instance, if you brake suddenly when a child runs out from behind a parked car you'll be penalised for 'bad' driving?

This will definitely see your premium rise...

"Everyone has incidents where they have to brake sharply," a spokesperson for Citroen told us. "The scoring mechanism is looking at how often you do this per thousand miles of driving as compared to other drivers so no one incident of this type is going to be that influential."

And what if someone else - parent, sibling, mechanic on a 'test drive' or similar - rags your car without your knowledge? "The Safety Score is calculated over a two-week period where the driver has driven more than 150 miles," we were told. "These isolated incidents are unlikely to have a big impact on the Safety Score as they will be diluted by the other miles the policy holder(s) complete. In any event, the vehicle owner should make any technician/garage aware of the black box in the car which would act as a deterrent." Your black box, your problem in other words. The full Q&A makes for interesting - and occasionally scary - reading too, especially given reports of data upload errors from some early adopters. See here for the full transcript.

Citroen's offer is, of course, opt-in and, for some perhaps, that necessary evil if it means affordable insurance. But what if you want to retrofit a black box to your car? Companies like Autosaint, a subsidiary of Fresh! Insurance, offer just that. Given that these companies are amassing a huge amount of data about you and your driving habits you'd like to think they're accountable, right?

'Ian Skidmore' advocates black box insurance

Well, we tried phoning them to find out. First time we nearly got sold a policy. Second time the receptionist wouldn't put us through to anyone, eventually giving us an email address to an office manager who turned out to be on holiday. And on the third attempt we got put through to a very confused lady working in HR. And we're asked to trust these firms with huge amounts of personal data about our every journey? Testimonials on their website predictably paint a rosier picture, not least from someone by the name of 'Ian Skidmore'. With a name like that, who can blame him for trying anything to reduce his premium...

Many on the original thread commented 'thin end of the wedge', and the fact Go Compare's Scott Kelly sees huge potential for older 'Sunday drivers' who don't travel during busy peak periods or late at night to make big savings indicates that it's not just aimed at young drivers. And, therefore, likely to become ever-more prevalent in your future insurance ring-around. You have been warned.

[pti]

No way, not for me thanks. The nanny state gets bigger.

[pti]

Ex Boy Racer said:

Ps. I did 150 miles at Brands Hatch a few weeks ago; I wonder what the box would make of that????

I was just going to ask about this?!

[pti]

Sgt^Roc said:

pti said:

No way, not for me thanks. The nanny state gets bigger.

Consider the mess they have made of road safety, the latest attempt being hundreds of squares miles of hatching and junctions reshaped via road marking, these devices are likely to be the only savior for raod safety

Really?

[pti]

okie592 said:

Did a quote on my current car with a black box insurance, £200 a year less. Not worth it. Your premium can go up as well as down my bets is it will be up and up and up is a stupid idea. I bet if you compared 2 identical drivers the one that stared with the cheaper premium would pay almost double by the emd

Every quote I have got recently (regardless of car) has been cheaper without the box. Much like the poster above. They'll have to do a lot better than that if they're going to convince me

[pti]

0000 said:

pti said:

Every quote I have got recently (regardless of car) has been cheaper without the box. Much like the poster above. They'll have to do a lot better than that if they're going to convince me

We may be fortunate that they're too short sighted to install the box for free and then subsidise the insurance for people receiving the boxes. It might be the only thing preventing them getting enough traction to make the idea mandatory and subsequently profitable.

It also may have been short sighted of me not to consider the cost of the box in the premiums. I suppose if that's how it works then it's only really beneficial to younger drivers with their extortionate premiums.

At the moment anyway.... and long may it last.

[pti]

Fuel Miser said:

pti said:

Over a grand for a Golf TDI? And your fast cars days are over? How old are you/how many accidents have you had/who is your insurer?!

I need to make some big efforts to get it cheaper when I renew in the summer. Thing is I only have 3 or 4 years NCB 'cos I was overseas for a while. I'm mid 30's. It sucks. Never had an accident.

Man, that's rough. I'm sure you'll be able to get it cheaper after a bit of shopping around.

[pti]

g3org3y said:

Driving safely is not just about the speed, the cornering G or the severity of braking/acceleration. It is to do with hazard awareness, reading the road and driving appropriately to the conditions (this may mean even way below the limit).

60mph in the middle lane of the M25 in the pissing rain with no lights on - the box says SAFE.
25mph in town with poor observation/lack of indication - the box says SAFE.

There will still be a shed load of really st driving out there but it will be determined SAFE/GOOD by the box. As I've mentioned previously, some of the worst driving I've ever seen has been way below the speed limit and didn't involve anything to trigger the box - it did however involve poor observation, lack of indication and a profound lack of awareness of the surroundings.

The box was bound to be introduced on the new drivers as insurance is simply becoming prohibitively expensive in recent years. What are the alternatives? If someone can save £500+ they'd be mad not to, who can blame them? For parents, it's a very tempting prospect too.

Will it make them a 'safer' driver? No. Not in my opinion because true safety isn't just about speed.
Will it positively reinforce poor driving? Potentially as per the examples above.

Am I bothered about this box situation? Only when having an insurance policy sans box becomes prohibitively expensive for all. I do unfortuantely feel that the boxes will become an inevitability and if you driving without one you will be stigmatised by joe public who are fed the BRAKE mantra on a daily basis.

My friends, we are a dying breed.

+1 Beautifully put.