Broker training underway for new distance-based auto insurance

Brokers selling auto insurance written by the CAA Insurance are now getting trained on a new product targeting low-mileage drivers.

All 41 of CAA Insurance’s broker partners “are being trained on all aspects” of MyPace, CAA Insurance president Matthew Turack said Wednesday. MyPace, scheduled to roll out this July, targets vehicles driven fewer than 9,000 kilometres a year. MyPace is available through brokers and direct to consumers.

Brokers “are there to educate and counsel the consumers on what is best for them and their insurance needs,” said Elliott Silverstein, manager of government relations for CAA South Central Ontario. “We rely on the brokers to know the customers and know what fits their lifestyle. This product gives them another option.”

Auto insurance customers who choose MyPace will have their total distance driven tracked by telematics devices, made by Octo Telematics, installed in their vehicles. The cost of telematics hardware has “come down quite substantially over the last five years,” Turack said Wednesday during the press conference.

Telematics is when computers are used to track vehicle behaviour such as distance driven, time of day, location, speed, sudden acceleration and hard braking. In Ontario, auto insurers are allowed to use telematics to offer discounts.

CAA first launched its “traditional” usage-based insurance about five years ago, Turack noted Wednesday.

MyPace is different because the only telematics data used as a rating factor is the distance driven. By contrast, other usage-based insurance (UBI) programs use data such as time of day, hard braking and sudden acceleration.

CAA launched the program Wednesday at Toronto’s Union Station, a commuter hub where thousands disembark from commuter trains every day. “One car you may drive long distance,” said Silverstein, giving an example of the kind of consumer who might be interested in the option. “The other car, you may just play around with it on the weekend or you may just park it and use public transit a lot.”

The Financial Services Commission of Ontario told Canadian Underwriter earlier that there are “no studies or reviews that provide actuarial evidence to quantify” the effectiveness of telematics in Ontario. The regulator prohibits insurers from passing on the cost of telematics devices to consumers.

“FSCO mandates that we do not reflect the cost related to the device or the billing of the program back to the consumers,” Turack said Wednesday during the launch of MyPace. “None of our costs that the consumer would pay includes any aspect of that it is completely absorbed by us.”