Tuesday, February 26, 2013. The Green Piece Column.
Telematics-or black box insurance-it is something that is expected to gain interest among consumers as fight back to rising premiums.
Since new gender equality rules, set by the EU came into force last December, young women in particular, have been expecting that their insurance premiums will rise. According to uSwitch.co.uk, 18 year old females face hikes of up to 50 per cent in their premiums, from an average of £1,307 to £1,965. Young men of the same age, scarcely benefit from this so-called, levelling of the playing field, with an average drop of just 5 per cent, from £2,298 average to £2,191.
But sensible drivers could save money by using so-called black box insurance.
As more drivers consider this as an option, there is something else that could benefit; the environment.
How it works
Drivers taking out black box insurance agree to have a telematics device fitted to their car to gather data on how well-and more precisely-how safely they drive. This data feeds back to the insurer and influences the amount you pay for your insurance.
The policy holder, too can access this data so that they can see how the insurance firm is rating their driving, and where, if anywhere, there is room for improvement, so that they can reduce their premiums.
Some policies enable drivers to take a pay-as-you-drive approach, helping motorists to easily manage their outgoings. Insurance firm Aviva is one of the first to offer a pay-as-you-drive insurance app, that charges you a monthly insurance premium based on the time of day, type of road, and mileage you clock up over the month.
The sort of driving behaviours which insurance firms are looking for with these insurance products, are exactly the sort of behaviours which will help to reduce your fuel consumption.
Safe driving behaviours, those which car insurance firms are aiming to encourage, are also those which we tend to define as efficient, such as driving at a permissible speed, avoiding harsh braking and acceleration and taking corners in steady manner.
Information is also sent to your insurer about your driving habits; typically how much, where and when you tend to drive. This creates an incentive to avoid driving during peak, commuting hours too; a time when driving accidents peak and congestion makes driving inefficient and more polluting, thanks to frequent stopping.
For these reasons, measures that encourage drivers to be safer are actually good news for everyone; from environmentalists looking for a greener approach to driving, to the young person eager to show their parents that they can be trusted.
Providers including Young Marmalade, Coverbox, iKube, Co-operative Insurance, Swinton and the AA are already offering black-box style insurance.
Popular invasion of privacy
Although there are those who will think such an approach to insurance amounts to little more than an invasion of privacy, these new products are proving popular with the British Insurers Brokers' Association (BIBA) which estimates that telematics-based insurance policies have increased fivefold over the past two years.
With savings of between 25 per cent to 30 per cent off policies, some young drivers could save around £1,000 (based on an average £3,635 premium for a 17-20 year old young man last year, according to Confused.com data).
Having a spy in the car creates a financial incentive to remain a green and safe driver, something that the parents of newly independent drivers find appealing.
With 18 year olds more than three times as likely to crash as a 48 year old and one in three road deaths of people aged under 25, it is easy to see why the industry is aiming its products at primarily the 17-25 year old age bracket. Youngsters themselves may be attracted to the product not just because of the financial incentive but because they may feel that they are being unfairly hit by the recklessness of other drivers in their age group.
The rise of smarter insurance policies will help us fight against unfair insurance quotes, but should also inspire more eco-driving styles and maybe even transport alternatives when driving is particularly inefficient and expensive.
While some might be turned off by the idea of being spied upon, young drivers have grown up with a ‘big brother is watching you’ culture where CCTV cameras are on every street corner, and speed cams monitor your driving speed.
With the rise of smart phone too, youngsters are increasingly taking a pay-as-you-go approach to paying for all their needs; from pizza to insurance.
The black box is here to stay and we expect it will be the latest weapon we have to encourage eco-driving and transport alternatives.