Cascadia’s largest private car insurer—Seattle-based Safeco—has finally announced its first entry into the world of on-board automotive infotech. And it’s not a new insurance plan. It’s a GPS device which, for $15 a month, will notify parents when their teenagers go too fast, too far, or the wrong place. You can now sign up for the service here.
If you’re aghast, well, I’m not surprised. It may make teens feel they’re wearing radio collars. But car crashes cause more than a third of deaths to teens, as the Seattle Times noted in its coverage of Safeco’s new offering. So I’m not against this service, dubbed Teensurance. In fact, I might have considered signing up, if my teenage son hadn’t totaled the family car sixteen months ago, launching us into car-lessness. And, judging only by my own reactions, I’m guessing the commercial market for teen tracking may be robust.
The privacy issues aren’t really what I want to talk about, and I doubt that Teensurance is Safeco’s intended endpoint. The endpoint is pay-as-you-drive insurance, and what impresses me is Safeco’s cleverness.
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One barrier to pay-as-you-drive insurance is that, to earn profits and satisfy state regulators, insurers need data on how people drive and how their driving changes in response to different pay-as-you-go pricing plans. Some insurers such as Progressive and Norwich Union have invested millions of their own to gather this data. Unigard has invested from its own pocket and also won federal and state funding for a Washington pilot project (full disclosure: Sightline is part of this pilot).
What impresses me is that Safeco may have identified a way to gather these troves of data at a profit. It’s found a segment of the market that will pay handsomely ($15 a month!) to have Safeco invade its privacy and track its every move.
So, in the grand scheme of things, Teensurance is just the latest Cascadian development in what is now a global race among insurers and technology firms to charge drivers for insurance in more exact proportion to the risks they impose on others: based on how much they drive, how they drive, when and where they drive. (This race is perhaps best chronicled in the charmingly ill-translated writings of the Spaniard Salvador Minguijon, which you can find here.)
(One particularly interesting approach to pay-as-you-drive is described here.) And PAYD is part of the larger transformation of transportation that information technology may unleash.
As a Cascadian, I’m rooting for our local entries in this race. But in the end, all that really matters is that drivers win an extra chance to save money by driving less—and that all of us win safer streets, less oil addiction, and less climate disruption.