May 13, 2013 – Desjardins Insurance is the first auto insurance company in Ontario to offer auto insurance coverage where policyholders can take control of their potential savings. If you drive well and drive less, it allows you, the policyholder to save more over and above all other savings offered.
UBI, otherwise known as usage-based insurance, has been used for a long time now by several United States and European insurers and has proven to help motorists lower their premiums, especially for those who drive on a fairly limited basis.
But there’s also evidence to suggest that these policies improve the environment as well, an issue that many Canadians take extremely seriously.
A few years ago, United States-based public policy think tank the Brookings Institute, published a report about usage-based auto insurance. After reviewing trial data from different states where insurers had implemented these programs, such as California, Brookings found that because drivers wanted to pay less in premiums, they often found ways of seeking out alternative transportation, thereby driving less frequently.
Researchers then extrapolated these findings so that they were more nationally representative. For example, analysts stated that if all motorists were to pay for insurance based on how many miles they drive rather than a set premium amount, overall driving would decrease nearly 10 percent, resulting in between $50 billion and $60 billion in savings for expenses related to accidents. But there would also be an environmental benefit, causing carbon dioxide emissions to dip by 2 percent and oil consumption by 4 percent. Many scientists point to greenhouse gases like carbon dioxide and fuel-based gases as chief contributors to global climate change.
UBI could bring nearly $300 in annual premium savings
But perhaps the biggest – or, at the very least, the most salient – savings will be found among drivers themselves. Brookings estimated that nearly 66 percent of policyholders who have registered for UBI in the US would wind up spending less for auto insurance – accruing savings of approximately $270 each year per car.
So bullish was Brookings about usage-based insurance, it even recommended that governments pass legislation allowing for this type of coverage in instances where state insurance regulations prevented it. It also suggested that the federal government get involved by providing $15 million to states willing to install trial periods for UBI.
“In short, UBI represents a win-win policy,” the report said. “What is good for drivers, in this case, is also good for society.”
Usage-based insurance programs are also commended by the Environmental Defense Fund. The U.S.-based nonprofit environmental advocacy organization notes that several countries have recognized the benefits of these policies and are available in foreign countries like Israel, South Africa, Japan, the United Kingdom and of course the U.S. and now in Canada. More than half of the states in the U.S. currently allow for usage-based auto insurance, with Texas being the first to make it available.
While the miles that motorists travel represents a significant portion of what motorists will ultimately pay in premiums, they should bear in mind that this isn’t the only factor that’s used in this evaluation. Other components of UBI include the way in which drivers operate their vehicles, such as if they’re aggressive drivers. Tracking devices that motorists attach to their car assess this based on how frequently and how hard the brake and gas are applied.
Some people who are opposed to usage-based insurance cite privacy concerns, as they aren’t sure where their information is being stored and if it’s being used for other purposes. To help alleviate this concern, Desjardins Insurance is making it a point to communicate up front that all data collected is completely confidential and will never be used for purposes other than for participation in the Ajusto program. In addition, all information collected is at the vehicle level, meaning that it is not possible to distinguish individual driving behaviour. For example, the device derives the total kilometers the vehicle is driven, not the kilometers driven by each individual driver. The data collected via the tracking devices are only used solely for mileage and driving behavior purposes, which insurers need to know in order to give motorists the discount they deserve so they can get the most affordable auto insurance in Ontario.
About Desjardins Insurance
A subsidiary of Desjardins Group, Desjardins General Insurance Group is one of the largest and most successful insurance companies in Canada, meeting the home and auto insurance needs of Canadians for over 60 years. Today, Desjardins Insurance has over 4,000 employees serving 1.6 million customers in Quebec, Ontario, and Alberta. For more information on ajusto, visit www.ajusto.com/.
SOURCE: Desjardins Insurance