Allstate Canada survey finds misconceptions on advanced auto insurance options may deter Canadians from taking advantage of their potential benefits
Toronto, ON (Oct. 1, 2015) – Many Canadians have embraced new automotive technology offerings because of perceived benefits, but when it comes to modernized auto insurance programs such as usage-based insurance (UBI), which involves in-vehicle telematics devices measuring driver habits, such as hard braking, Canadians appear to be making erroneous assumptions.
Research conducted by Leger on behalf of Allstate Canada revealed a significant amount of confusion across the country about the potential benefits of usage-based insurance, the impact of in-vehicle telematics on insurance premiums, and how auto insurance companies handle the privacy and data of participants.
Canadians Unclear About the Benefits of Usage-Based Insurance and its Impact
While usage-based insurance programs, also known as telematics programs, can reward participants with a reduced premium rate reflective of their driving habits, Canadians are skeptical about how a UBI program could benefit them. Fewer than half—just 41 per cent—feel the biggest potential benefit to participating would be that they could end up with a discount on their rate, while about one-in-three (34 per cent) do not see any potential advantage.
“Participating in a UBI program empowers drivers by providing them with the opportunity to showcase how safely they drive,” says Ryan Michael, senior vice-president and chief risk officer at Allstate Insurance Company of Canada. “People can learn more about their driving habits and, if you demonstrate you’re a safe driver, you may end up with a reduced rate.”
The survey also revealed that Canadians do not have a consistent idea about how a UBI program could impact their insurance rates. For instance, one-quarter (26 per cent) believe their rates could increase, though the same amount (26 per cent) feel their rates could decrease. Nearly one-third (31 per cent) feel their rates would remain unchanged.
“There is a clear gap in understanding here as the purpose of a UBI program is to create a personalized insurance premium,” says Michel. “The fact is, enrollment in a UBI program won’t result in a rate increase.”
Concerns around Data Collection and Privacy
In Canada, all UBI programs must go through a regulatory process before being introduced to a market and to ensure all personal information that is collected is in line with Canadian privacy legislation. Despite this fact, nearly half of Canadians (46 per cent) do not feel that auto insurance providers will keep their data private, while two-thirds (65 per cent) are concerned their provider will track their location if they opt into a UBI program.
“Usage-based insurance programs are relatively new in Canada and with any new technology, there are going to be questions about how it works. We want to help answer those questions and assist Canadians in making the right decisions for them,” says Michel. “For instance, many Canadians don’t like the idea of their location being collected. If that’s the case, you may want to consider a usage-based insurance offering that doesn’t collect location data, such as Allstate Canada’s program.”
Questions Canadians Should Consider
To help Canadians determine if they may want to participate in a UBI program, Allstate Canada recommends asking the following questions:
- Are you a good candidate for a UBI program? Do you take the time to gradually slow down for red lights or stop signs? Do you drive within the speed limit and accelerate at a gradual rate? Do you drive occasionally, rather than frequently? If you’re a safe driver, it may be beneficial for you to participate in a UBI program as you may qualify for a discount on your rates.
- Do you know how the company is going to use your information? What information will the insurance company collect as part of the UBI program? Will it include basic habits like hard braking or rapid acceleration? Is it clear how the data being collected is going to be used? Your privacy comes first, so be sure to read the fine print and gain an understanding of how the program works to ensure your comfort before participating.
- Does the program track your location? In doing your research, see if location data is one of the details that is shared with the insurance company through its UBI program. Not all UBI programs collect location data, so if it is something you aren’t comfortable with, look for a program that does not do so or provides it as an option.
- Are there multiple drivers using your vehicle? If you share your vehicle with other drivers in your household, consider if a UBI program is right for your group. These programs generally do not differentiate between drivers, so think about whether you’d be comfortable having the other drivers included. However, if you’re looking for a great opportunity to help educate your teenage driver about how to drive more safely, the data generated through usage-based insurance program could be a great teaching tool.
For more details about the myths surrounding usage-based insurance, visit Allstate Canada’s Good Hands® blog.
About the Study
Leger conducted a quantitative online survey of 1,456 Canadians. The fieldwork was completed between August 24 and August 27, 2015, using Leger’s online panel, LegerWeb. A probability sample of the same size would yield a margin of error of +/- 2.5 per cent, 19 times out of 20.
About Allstate Insurance Company of Canada
Allstate Insurance Company of Canada is one of the country’s leading producers and distributors of home and auto insurance products, including usage-based insurance, serving Canadians since 1953. The company strives to keep its customers in “Good Hands®” as well as its employees, and has been listed as a Best Employer in Canada for three years in a row. Allstate Canada is committed to making a positive difference in the communities in which it operates and has partnered with organizations such as Mothers Against Drunk Driving (MADD Canada), United Way, and Junior Achievement. To learn more about Allstate Canada, visit www.allstate.ca. For more safety tips and advice, visit goodhandsadvice.ca.
Source: Allstate Insurance Company of Canada