REVIEW: The insurers’ consumer factsheet on telematics insurance – verdict: Send it back to the drawing board – Needs much more work.
I confess to be bewildered by this document from the Association of British Insurers and British Insurance Brokers Association – published here. The authors say ‘this factsheet’ has been:
developed in consultation with insurers, the Financial Conduct Authority, which regulates the insurance industry, and the Information Commissioner’s Office, which promotes data privacy for individuals.
If that is the case then this document provides a good indication of how underdeveloped the insurers thinking is on telematics and also how primitive is their understanding of electronic data and consumer rights. The whole document – as I now discuss – is woefully inadequate and it is to be hoped is right now being subject to complete revision.
First – the authors say:
The guide is voluntary,
As we have said before voluntary guides are more or less useless for the consumer – they provide insights into the thinking of the authors but are no good when it comes to obtaining accountability and redress. In fact this document is completely silent on insurers’ complaint procedures.
Second – the authors say:
The ABI has produced a good practice guide for providers of pay how you drive insurance to help ensure that customers are being treated fairly. […] This consumer factsheet , which is based on the good practice guide, sets out what customers can expect from their ‘pay how you drive’ policy. When selecting a ‘pay how you drive’ policy, you may want to ask the provider whether they comply with the ABI’s good practice guide. If they do, you can be confident that you will be treated fairly. (My emphasis).
There is no justification for this statement. The so-called ‘good practice guide’ is another vague and worthless document – as I have already said in my review here. Confidence built on that document would be like trusting a house built on sand.
This factsheet has a short and fairly standard description of telematics or ‘black box’ insurance. Interestingly it lists some of the factors which the insurers use when examining the data collected by the black box or app and when `making judgements´about our driving behaviour and thus working out how much to charge us for insurance.
Insurers will assess driving performance in different ways, but most will consider things such as the number of miles driven, the types of roads used and speed and braking patterns.
What on earth does this mean?
It could mean that each insurer adopts its own own set of criteria?
Or, it could mean that all insurers use the same criteria to assess our driving but come to different conclusions on it? We do not know – a critical ambiguity particularly given that the Royal Society for the Protection of Accidents (who do not seem to have been consulted in the creation of the guidance) suggested, in its comprehensive report on telematics and black box technology, early this year:
‘… There are issues around data ownership and data portability that need to be clarified. For example, drivers may find it very useful to be able to use the data collected about their driving when seeking competitive insurance quotes from a range of different insurance companies. This would be much easier if there were common data standards used across the insurance industry, but at the moment there are no agreed industry standards (except for raw GPS data)’
-RoSPA Black Box report p 4′
So, no matter how vague the concepts, or complex the processes, the guidance places responsibility for understanding insurance terms and conditions on us:
As each insurer will assess driving behaviour in different ways, how you drive will have a different effect on your premium depending on which policy you choose. You should therefore always read the policy terms and conditions before buying insurance to make sure you understand how your driving behaviour will be taken into account, and how to make the most of your ‘pay how you drive’ policy.
Equally, how data is interpreted and used varies:
In some cases, premiums will be adjusted at set points during the policy to take account of driving behaviour data. In other cases, premiums will stay the same throughout the life of the policy but low risk driving behaviour will result in non-monetary benefits. For example, where insurance policies set annual limits on mileage and charge extra for any miles driven above that limit, safe driving may be rewarded with a free increase in the annual mileage limit. Some other policies may not make adjustments to premiums or give non-monetary benefits until the policy is renewed. Typically each insurer will offer reduced premiums when a policy is renewed if you have shown you are a safe driver.
Let us look closely at one of these benefits – emergency notifications of accidents.
The insurers could say at this point that there is an unstoppable move towards the universal adoption of in-car telematics fired by a common Europe-wide concern to reduce road deaths and accidents. This is because by the end of 2015 every new car will, by EC law, have to carry a telematics device capable of dialling the Europe wide emergency number. The general public benefits require Europe-wide legislation because some EU members were slow to adopt the idea in its initial stages (lamentably, the UK being one of them). Why? The EU says:
The data received through the eCall system will allow emergency services to provide assistance to vehicle drivers and passengers more quickly, thus helping to save lives and to treat injuries rapidly. Estimates suggest that eCall could speed up emergency response times by 40% in urban areas and 50% in the countryside, and save up to 2500 lives a year.
But there are other benefits says the EU: :
In addition to the road safety benefits, eCall will also have a significant impact on reducing the congestion caused by traffic accidents and on reducing secondary accidents caused by unsecured accident sites. Industry also benefits via the many companies that are involved in the delivery of technologies, components and services used in different aspects of eCall including in-vehicle systems, wireless data delivery, and public safety answering point systems. Moreover, it is expected that the in-vehicle equipment introduced by eCall could be used for additional added value services (such as the tracking of stolen cars).
However, there is something about accident reporting which bothers the insurers – hence the short discussion of this issue in its guidance to insurers. What are these issues which the industry is not sharing with us? What will the do with the automatic accident detection information? Will it act – immediately? – when assessing the claim? What is the insurers subsequent relationship with (a) the police and emergency services (b) the highway authorities? How are the insurers gearing up for eCall? We do not know – we need to know.
‘Low-risk’ and ‘high-risk’
These two terms are used without definition – however, what if I am not a low-risk driver? – the insurers warn:
‘Pay how you drive’ policies will not always be cheaper than traditional policies. If you frequently drive late at night or on unsafe roads, or you consistently drive badly, your insurer may consider you a high-risk driver. Every insurer will respond differently to high-risk driving behaviour. (My added emphasis)
At first glance this looks reasonable (if you set aside the fact that, as far as we can gather, there does not appear to be one standard set of definitions between the insurers). But who is defining each of these concepts – for example what is ‘late at night’? What time is considered to be ‘late’ and what is not?
What is an ‘unsafe road’? How are we, the drivers, to know if the roads we use are unsafe or not – what chance do we have to avoid them? – what is to stop the insurer making its own decision about what is or what is not an unsafe road in order to adjust premiums in its own favour. In fact, like supermarket prices, what is to stop the insurer tweaking the ‘unsafe’ formula to increase premiums and hence improve income streams?
Why is there any such category as ‘unsafe road’ at all? Is it unsafe just now – or for all time? What makes it unsafe (a recent accident – as in the eCall example – or an accident black spot?). Don’t the insurers have a general public or moral responsibility to ensure that any unsafe road is brought to the attention of the appropriate authorities and quickly made safe? There is a conflict of interest here – and it is not up to each individual insurance company to make these decisions behind its closed doors. Just think for a moment – this has meant the insurer has to deliberately create a team of people to sit round the table concocting a definition of ‘dangerous road’ together with the bits of maths required to detect it – not by any means a straight forward operation.
When it comes to benefits, or penalties, the insurers general tactic is the same; to place responsibility on us to ‘read our policies carefully’. It doesn’t matter how carefully we read them – many concepts are undefined and thus remain beyond us. The insurers thus abdicate their leadership role in consulting on and promoting a rigorous set of common criteria which all member insurance companies must follow:
You should always read the policy terms and conditions before purchasing ‘pay how you drive’ insurance to ensure that you understand how high-risk driving behaviour will be taken into account and to help you decide if this type of policy is right for you.
Will my ‘pay how you drive’ data be secure we ask:
Insurers have a legal obligation under the Data Protection Act 1998 to protect your personal data. Any insurer that did not protect your personal data could receive fines and other penalties under this Act.
Again, this sounds all very well. But the data protection laws are cumbersome to operate from the ordinary persons point of view. They also need refining to meet the new complexities.
And, the information is valuable and will be ‘shared’ (does this mean sold?):
Typically, insurers use specialist companies to help them deliver their ‘pay how you drive’ policies. These companies will often have access to your ‘pay how you drive’ data. Sharing your ‘pay how you drive’ data with other third parties can also enable you to benefit from additional services , such as breakdown cover, or special offers from partner organisations.
But – notice – big questions remain unanswered. Who owns this data – surely the driver does? How has the insurance company come to take it off us – what was the bargain struck? We know that this driver data is itself a highly valuable commodity – but why should this automatically be considered the property of the insurers – it is either our personally – or it belongs to the public generally and employed for the general public good.
The insurers say:
… your insurer should always ask your permission before sharing your data with any third parties who aren’t involved in delivering your insurance policy. The exception to this is where data is shared with other insurers for the purpose of detecting and preventing insurance fraud.
So permission needs to be sought – but, as we have already observed, except when it comes to ‘insurance fraud’. There appears to be nothing here to stop the insurer trawling files for potential cases of fraud and acting accordingly. Where are the safeguards here? We do not know:
Insurers will not share your data with the police or any other authorities unless they are forced to do so by a court order or you have given your express permission to do so.
… this is contradicted by the guidance to insurers who will reveal information to what it calls (with a mysterious capitalised ‘A’ – ‘the Authorities’). Again, let’s pause over this for a moment. Will insurers really not share data with the police ‘or any other authorities’. What, for instance, have they said about the Edward Snowden revelations – when it is clear governments have asked for all kinds of personal data? Have the insurance companies received requests – if so, how did they respond, and how would they respond to future requests? Conversely, in order to develop the public good, there will be cases when it would be in the public interest to reveal information about driving profiles, for example, to the police (who have responsibilities for safer roads and accident reduction) and the highway authorities (who build, improve and maintain safer roads and who have an interest in ensuring road capacity is efficiently used)?
Rights to data
The note comments breezily:
Under the Data Protection Act 1998, you have a right to access any data that is personal to you, which may be more than is provided via the portal. Asking for this information is known as making a ‘subject access request’ and there is usually a small charge for this data.
There is more to it than that. Alas, the process for obtaining information is expensive and drawn out – very likely to wear the complainant out. At the very least – this advice does not admit the difficulty in defining the information sought and tracing it to the source. New rules and procedures are needed.
There is another aspect of all of this which is worth recording – it is the self-aggrandising view the insurance and financial services have of each other. The poverty of these documents is matched inversely by the lavish praise the authors heap on them – for example the Chief Executive of the Financial Conduct Authority says, in congratulating the AMI on its guidance notes:
‘These publications speak of an insurance industry that places significant weight on consumer outcomes.’
Oh no they don’t. Put plainly, they speak of an out-of-touch, introverted, rudderless, ill-informed and above all complacent industry that has small regard for either promoting the public interest in telematics or creating rigorous – and thus meaningful and enforceable – consumer and citizen rights.
What is the insurers answer to our questions? There is only one way to find out – and that is to ask them.