Usage-Based Insurance Could Become a Problem for Your Agency

Unfortunately, usage-based insurance (UBI) could become a problem for your agency.

You can always tell the pioneers because they’re the ones with the arrows in their backs. When insurance companies wander into uncharted grounds, they often drag agencies along with them.

If you have a company who is involved in UBI using telemetrics to collect their data, you could become a party to future lawsuits. UBI is also known as pay as you drive (PAYD) or (more commonly) pay how you drive (PHYD). The data is collected and reported to the carrier through a telemetrics device.

A few weeks ago Wired published an article about a hacker remotely high-jacking the controls of a Jeep Cherokee. When I read that article, I wondered if this had implications regarding the telemetrics dongle used by companies like Hartford and Progressive to field-test a driver’s actions, such as braking.

A subsequent article in Business Insurance seems to suggest my concerns were well-grounded. Researchers at UC San Diego used the dongle for Metromile to take over some controls on a Corvette. Metromile is a new, west coast company that is charging for auto insurance based on actual miles driven.

Should one of your customers experience a loss due to a hacker, your agency could be named in a suit, claiming you advised your customer to install the dongle.

You should:

1.)   Consider advising your customers NOT to use the UBI telemetrics based on hackers.

2.)   Consider contacting your customers who are using the dongle, to tell them about the potential for hacking.

3.)   Consider contacting your companies to see if they’re willing to provide a hold-harmless for your agency.

Usage-based insurance isn’t going to go away. Your agency doesn’t need to suffer the slings and arrows of a pioneer.

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