The insurance company Allstate Corp. is preparing to launch products aimed at parents who want to monitor the driving habits of their teenage children. The Northbrook, Illinois-based insurer is adding the features to its usage-based policies.
Usage-based insurance policies are already expanding at Allstate and many other insurers. In exchange for allowing the insurance company to install a monitoring device on their vehicles, policyholders receive discounts for safe driving. Allstate’s monitoring device is called Drivewise and was introduced in 2010.
Tom Wilson, Allstate’s CEO, said the expansion of the Drivewise program would allow parents to know where their kids are if they are driving and would also include ways of teaching teenagers better driving skills by giving them a driving score based on certain algorithms. Data collected by the Drivewise device will show up on a user website where parents can look at a “report card” that measures safe driving.
State Farm, another auto insurer, offers online products to promote safe driving, including Road Trips, which gives three-minute tutorials on driving skills, and Road Aware, an online tool that helps teens learn to anticipate road hazards. For U.S. teenagers, traffic collisions are the leading cause of death. After declining steadily for years, deaths of teen drivers increased in the first six months of 2012.
Usage-based policies like Allstate’s Drivewise are becoming more common as technology advances to allow for the collection of more driving data. The technology in question is known as telematics, which refers to a combination of telecommunications and informatics. The devices record data when the car is in use and can allow insurance companies to charge customers only for the time when the policy is in use and to offer discounts on premiums as a reward for safe driving habits. The idea is popular among many consumers, as it can result in lower premiums and has an inherent fairness. Auto insurance agents also welcome the idea as a way to attract consumers in a competitive market.
Insurers’ monitoring devices are a consumer choice, but almost all new cars are also equipped with electronic data recorders, or “black boxes,” that keep track of information like speed, braking, seat belt use and steering. In the event of a crash, the recorders, which are similar to black boxes in airplanes, store data from a few seconds before and after the air bag is deployed, to assist in determining the cause of the accident.. The use of data recorders in automobiles has raised issues of privacy and data ownership that have yet to be resolved.