How Intact is changing usage-based auto insurance in one province

Intact Insurance is making some key changes to its usage-based insurance (UBI) product for motorists in Nova Scotia.

Essentially, the company is requiring continual monitoring of an insured’s driving behaviour rather than having the same discount apply until the end of the policy term.

With usage-based insurance (UBI), motorists in several provinces can get discounts if their behaviour (such as speed, acceleration, time of day, sudden acceleration and hard braking, detected using telematics) is perceived as low-risk. In Nova Scotia, under Intact’s UBI program my Driving Discount, an insured driver gets a one-time enrolment discount that applies until the end of his or her current policy term. On renewal, eligible clients get a discount based on their driving behaviour during an “assessment period.”

“The new program requires continuous monitoring to maintain the discount,” Nova Scotia Utility and Review Board chair Peter Gurnham wrote. “The driving behavior will be reassessed at regular set intervals and the discount may increase or decrease as a result.  Intact explained that driving behavior can change over time and locking in a discount may be inappropriate.”

Nova Scotia’s auto insurance regulator approved a change to the program on Oct. 16.

The changes take effect Jan. 8, 2020, for new business. For renewal business, the changes will take effect on Feb. 8, 2020, although existing clients would have the option of having their program grandfathered.

Intact is also changing to a smartphone app only, as opposed to giving clients the option of installing a device into the vehicle diagnostic port.

By using a smart phone app only, information would be tied directly to a particular driver, Gurnham wrote.

A third change approved by the board is to change the name from my Driving Discount to my Drive.

Intact reports using a plethora of information from a smart phone app to determine a driver’s risk in Nova Scotia. Data include vehicle location, average speed, average acceleration, distance travelled, accelerometer and gyroscope data (acceleration, deceleration, cornering events), start and end date of travel, travel start and end times, mileage, road type, weather conditions, traffic conditions and speed limits. It also detects distracted driving because Intact can determine whether the driver is using their smart phone while driving.

The “ultimate objective” of UBI “is to make sure people have feedback on a constant basis; that they receive information on the way they drive,” said Louis Gagnon, president of Intact’s Canadian operations, during the 2018 Property Casualty Underwriters Club CEO Luncheon.

“Sometimes it’s related to a discount. Sometimes it’s simply related to information – where they should go, where they should park their car,” Gagnon said at the time.

With UBI, Intact is “trying to get past proxies” for risk in underwriting auto insurance, said Jean-François Larochelle, director of Intact’s data lab, during a webinar in 2018. Examples of proxies include the driver’s age and where the vehicle is parked at night, Larochelle said during the webinar, Insurance Analytics to Supercharge Performance, hosted by Insurance Nexus.

“What we are trying to get [from telematics] is, are you a good driver or not?” Larochelle said. “The next question on our side is, is it strong enough to remove all the other variables?”

Other carriers using UBI in Canada include Desjardins, The Co-operators, Allstate and CAA.