Friday, April 03, 2009

Pay as you drive 3

Couple of posts from the Smart 421 people on usage-based car insurance.

Their conclusion: it isn't going to save anyone enough money to justify the cost and inconvenience and to overcome the concern for privacy. Adoption only becomes viable when the devices become a commodity (multiple providers, standard interface, routinely fitted to new cars), with a strong carrot/stick from the government (e..g legislation or road charging).

This is pretty close to what I said when the Norwich Union experiment was abandoned last year (Pay as you drive 2).

The Smart 421 bloggers also have some comparisons with Pay-As-You-Go models for other utilities, including domestic energy and water, and telecoms. Telecoms is clearly more complex than energy and water consumption, and has much more complicated pricing schemes. What are the lessons for software pricing - e.g. Anything-as-a-Service?


Chris Bird said...

In 2001, when the company I was working for was assisting GM with OnStar, I came up with an insurance concept (which went nowhere then). The idea was that you could have a vehicle that had sedate - around town performance and impress-a-date performance at the flick of a switch. When the car was put into boy-racer mode, it would automatically ratchet up the premium (or actually reduce the premium reserve). Then when you go back to the sedate mode, it would ratchet it back.

This was predicated on an unholy alliance between the telematics vendors and the insurance companies.

Some while later, car rental companies started charging people extra if they exceeded a certain speed in the vehicle. The GPS system was used to discover this. Here's the appellate court ruling from the State of Connecticut on the matter.

Marco Seiriö said...

I think all GPS tracking systems raises privacy issues. This issue is so important that I think that any vendor with a tracking solution need to spend lot of time thinking of a good way to set up things so that people not get 1984 vibes with these systems in place.

I found out that it is commonly OK for a driver to let someone know when he's been standing still for 10 minutes in a dodgy area on a saturday night, but not OK to track every single step he takes.