State Farm offering auto insurance discounts with in-car monitoring system

2013-01-21T06:15:00Z State Farm offering auto insurance discounts with in-car monitoring systemKAREN RIVEDAL | Wisconsin State Journal | | 608-252-6106

Since early December, State Farm Insurance has been offering Wisconsin residents the chance for deep discounts on their auto coverage, if they agree to let the company, in effect, ride shotgun.

State Farm says the program, dubbed Drive Safe and Save, allows for a more accurate calculation of risk, by way of a small device added to a vehicle’s diagnostic port that tracks real-time driver behavior. Factors such as speed, mileage, lane changes, location, time of day and braking urgency are measured.

Drivers who participate in the program get a 5 percent discount immediately, and then are eligible for further cuts of up to 50 percent after six months of monitoring, depending on what the record shows.

State Farm is offering use of the monitoring device free for the first year, with a charge of $5 to $10 per month after that.

“This is just a way for us to set better rates for customers who are good drivers,” said Missy Dundov, spokeswoman for the Bloomington, Ill.-based insurer. “This program is a chance to get discounts.”

No doubt welcomed by many cost-conscious consumers, the voluntary program nonetheless raises alarm bells for those concerned about technology over-reach and the sharing of personal information with corporate interests.

“If people choose to (sign up for the program), that’s up to them,” said state Sen. Jon Erpenbach, D-Middleton, a longtime privacy advocate who led the creation and adoption of the state’s popular “do-not-call” list. “But I would just caution people to know exactly what they’re getting into.

 “I have huge privacy concerns (about the program),” he added. “Also, they are offering a 5 percent discount, and I would assume somebody’s rates are going up somewhere else to pay for that.”

Created in 2009, the program was first offered by State Farm in Illinois and now covers 40 states, Wisconsin being the latest.

Ann Avery of State Farm wouldn’t reveal how many people have tried the program, but she said the average discount has been about 10 percent.

Other insurance companies, including Progressive and Allstate, offer similar versions of driver-monitoring programs in at least some states.

Madison-based American Family Insurance tested the concept in a pilot program in late 2010 and 2011, spokesman Steve Witmer said. He didn’t know whether the company would offer it again, but said the possibilities were intriguing.

“Telematics technology offers great promise for providing drivers and insurance companies meaningful data about their driving habits,” Witmer said. “We will continue to pursue this and other emerging technologies that may benefit our customers moving forward.”

American Family does offer a free monitoring program to try to reduce risky driving by teens.

Known as Teen Safe Driver, the program uses an in-car communication service known as DriveCam to provide a video and data record of driving habits, plus coaching feedback. John Lee, a UW-Madison professor of industrial and systems engineering, has studied Drive-Cam and similar monitoring systems as part of his research into topics such as driver distraction and technology.

“It’s a fair thing to question whether insurance companies know how to accurately measure risk from these data sets,” Lee said. “Anytime you’re dealing with data, you can analyze it well or poorly.”

But Lee also said his research — some of it partly funded by American Family — convinced him that such systems can estimate risk accurately and provide feedback that helps people become safer drivers.

 “There’s a surprising amount of useful diagnostic information in how we drive, and this technology is making it possible to provide that back to the driver so they can better understand how to be safe,” Lee said. “Which is fantastic, and just a wonderful opportunity to prevent (traffic crashes), the leading cause of death of people between 5 and 35.”

Erpenbach said he wasn’t surprised to see insurance companies trying to monitor people’s driving practices, but he questioned where it would all end.

“If I’m State Farm, sure, I want to know about any driving habit of my policyholders,” he said. “I would also love to know, if I’m State Farm, what everybody does in their houses (for home insurance purposes). And I’m sure health companies would love to see people’s grocery lists.”

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(18) Comments

  1. Mr Mellow
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    Mr Mellow - January 21, 2013 9:34 pm
    'Papa' assumes Liberals will be exempted, and then 'classic' uses that assumption to justify accusing them of a double standard.

    Nice setup. One could almost call it a "classic."

  2. jimri
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    jimri - January 21, 2013 5:47 pm
    I think that the State Farm program, as well as similar ones by Progressive, Allstate, etc., are all voluntary. No one is making you participate. If the value proposition is attractive to you and you feel your driving habits will earn you better rates, you can sign up if you want. Most probably, it is the better driver who will choose this. Over time, the rates for drivers who don't want to volunteer will go up, since they are who will be left after the best drivers opt to prove their eligibility for discounts. If you are a good driver but want to be private, you will probably get a better deal going with another insurance company that treats everyone the same - i.e., doesn't try hard to differentiate good and bad drivers with the newest tools and technology.

    As to On Star, the data that they collect and claim the rights to sell is anonymous and aggregated - it does not contain the names of any individuals. You cannot buy the driving characteristics and history for Mary Smith of 200 Main St in Madison. What is valuable to an insurance company is to get, e.g., a profile of the driving characteristics of all people by vehicle brand or vehicle horsepower or vehicle seating capacity; of people who live more than x miles from their job; of people who buy their car vs. lease their car; etc. They don't need to know about YOU, they really want to know about all of the people just like you, to be able to better construct predictive models that let them outfox their competitors in terms of reaching the customers they desire and pricing them individually better than other companies do.

  3. classic
    Report Abuse
    classic - January 21, 2013 5:36 pm
    So after a year they will charge me five to ten a month to keep this in the car for an average discount of 10%. My insurance is about 50 a month, and I get a ten percent discount which amounts to five dollars and they charge me ten to use it, hey thats only a loss of another five
  4. classic
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    classic - January 21, 2013 5:34 pm
    why should they be exempt they use the same roads for the same purpose. Oh thats right the old liberal double standard. You pay to support me.
  5. Mr Mellow
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    Mr Mellow - January 21, 2013 4:50 pm
    The General Motors OnStar system provides tracking and other data about individual vehicles, and automatically transmits that information back to GM via the cellular network. Back in 2011 the company told OnStar subscribers that it had the right to TRACK and SELL information about their vehicles' location and speed (most probably to insurance corporations) -- even if the owner NO LONGER subscribed to the service!

    When challenged about this, GM agreed to end automatic data collection and resale, but only AFTER an owner cancels their OnStar service. Current customers are SOL.

    And before anyone starts an Obama rant about this... OnStar was first installed in 1997.
  6. Mr Mellow
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    Mr Mellow - January 21, 2013 4:09 pm
    The Wisconsin Transportation Finance and Policy Commission recently recommended that the cost of our annual vehicle registration be tied to the number of miles we drive. The commission was created under Governor Walker's 2011-2013 biennial state budget.

    'Course, neither Walker nor Obama has endorsed any tax per mile recommendations.

    More walleye, less maniac, please.
  7. Mr Mellow
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    Mr Mellow - January 21, 2013 3:51 pm
    Gotta love how the Right Wing turns everything into a complaint about the Guv'ment.
    Never a concern about all the data warehouses built and filled by corporations so they can profile everyone for commercial exploitation -- oops, I mean for marketing purposes.
  8. scorp
    Report Abuse
    scorp - January 21, 2013 2:59 pm
    One must know that this cute little trick will soon be mandated by the gov so that one can be assessed fees for the amount of highway use. Now with the hybrids and electric cars lowering the gas tax receipts,, this a great way to increase revenue.
    Pure ins scam to reduce the sums they will pay the injured by raising otherwise frivolous contributory negligence defenses.More money for the lawyers and rip off by the companies.
  9. PapaLorax
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    PapaLorax - January 21, 2013 12:50 pm
    yeah - but the libs drive the electric cars...I assume they will be exempted.
  10. Walleyemaniac
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    Walleyemaniac - January 21, 2013 11:52 am
    Im just curious of what all of you have to say about tax per mile .You know the one, the one brought up by Ray LaHood,the secretary of transportation ,under king Obombya.I If I were all you, I don't think Id like it because its just adding a few thousand dollars more on your already sky rocketing taxes.i think his thinking is that Republicans travel more, vacation more, which is probably true, but republicans can afford it and it won't hurt them like it does you!And I don't think it will do to much good for the economy and tourism,any thoughts?
  11. axolotlsx5
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    axolotlsx5 - January 21, 2013 11:16 am
    i use to do every thing through statefarm and after about 10 years statefarm started to screw me over, first time was jumping my house payment by $100/month asked to refiance to lower interest rate and was told no so i went some place else and was given a interest rate 3% lower then state farm. have also had my truck vandlezied while on my property along with my 1000 gallion pond and was told too bad not covered, i have replacement insurance on my property and belongings. i wouldnt tell anybody to use statefarm. they credit card department is alright thou.
  12. Report Abuse
    - January 21, 2013 10:44 am
    I think you are on the right track. After the recent Hurricane on the East Coast Stare Farm and several other Ins Cos. refused to pay homeowners and claimed the damage was from flooding. This despite facts that showed the houses were Blown down. INsurance is the biggest scam out there. Only business where you pay before you recieve anything and then when you do submit a claim they find all sorts of reasons to deny or limit the payments. More and more fire claims are being denied when they can't determine a cause so they just Assume it was set. It's like being guilty unless you are proven innocent. We all need to stand up to this abuse.
  13. Native
    Report Abuse
    Native - January 21, 2013 10:32 am
    Ah, yes, State Farm. Member of ALEC and unashamedly so. We used to insure several cars, several motorcycles, our house & belongings with them. We found out about their membership in ALEC and asked them about it. Their response? "We deserve a seat at the table". So we cancelled and switched to another Wisconsin-based insuror who has NO inviolvement with ALEC. They, too, have a "seat at the table" ... by representing their interests honestly before the legislature, not by being a stalking horse for the far right.
  14. kriley
    Report Abuse
    kriley - January 21, 2013 8:35 am
    Too late. Most cars store the last 10-20 seconds of readings as far as throttle setting, speed, braking, etc. it has been used in court cases. My daughter voluntarily had a monitor installed in her car for 30 days to get a lower rate if she didn't drive like an idiot.
  15. Badgerberling
    Report Abuse
    Badgerberling - January 21, 2013 8:27 am
    I like the idea of an installed monitoring device because it better correlates driver behavior with risk. People with poor driving habits should pay more for car insurance, right now they're being subsidized by the better drivers. A mature and robust monitoring program will protect innocent drivers when accused of infractions and direct responsibility to the correct party.

    Don't worry about a similar application to dietary and health practices, that one is already in the works.
  16. toobad
    Report Abuse
    toobad - January 21, 2013 7:53 am
    Our ruling overlords at the Federal Government will soon mandate these devices on new cars. There is no level of citizen surveillance that the Feds won't want implemented.
  17. spooky tooth
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    spooky tooth - January 21, 2013 7:50 am
    Too much Big Brother!
    State Farm you're putting drivers on a very dangerous slippery road.
  18. AngryDeuce
    Report Abuse
    AngryDeuce - January 21, 2013 7:40 am
    Anyone that goes for this ought to have their head examined. On paper it sounds like a great idea, but in practice you have to remember that this is an insurance company, and that their number one imperative is to NOT pay out claims.

    So install this device into your car, and next time you're in an accident, don't worry, they'll find *some* reason you were at fault and why they shouldn't have to pay you (or at the very least, some way to drag it out for as long as possible)... ESPECIALLY if there are injuries requiring hospitalization...

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