Does Usage-Based Auto Insurance Need More Oversight in the United States?



A report from the Consumer Federation of America calls on state regulators to watch more closely.

The Consumer Federation of America released a report urging regulators across the United States to apply greater oversight to usage-based auto insurance.

These programs use telematics to measure the driving habits of policyholders and apply discounts for safe behavior.

The consumer advocacy group pushed state regulators to take this step with usage-based auto insurance programs while adopting a number of other consumer protections. He sought these regulators to apply closer scrutiny to the growing category of coverage using telematics.

Several major auto insurers, including State Farm, Allstate and others, have been offering their own telematics programs for several years. The programs are marketed to consumers as giving them the opportunity to prove they are safe drivers so that their premiums reflect this lower risk. By tying the cost of customer policies to their driving behaviors, drivers could benefit from discounts that would not be available to them otherwise, provided they have low-risk driving habits.

Usage-based auto insurance has grown rapidly throughout the pandemic, according to industry experts.

The Consumer Federation of America report states that the use of telematics requires the application of additional monitoring. He said that without taking this step, “telematics programs could lead to unfair prices, inappropriate use of personal information, racial and ethnic discrimination and data insecurity.”

On the flip side, the consumer advocacy group also said that if these programs are indeed implemented correctly, they could indeed be of benefit to consumers with safe driving habits.

“Currently, auto insurers use many non-determining factors, such as your credit history, education, occupation, and other factors, to calculate auto insurance premiums. Most of the time unfairly, and that translates into a lot of unfair discrimination, ”said Michael DeLong, Consumer Federation of America research and advocacy associate, while discussing the call for auto insurance oversight. based on usage. “Telematics, theoretically, if all goes well, could replace these unfair rating tools with fairer pricing systems that are more dependent on the driving behavior of consumers. For example, how much you drive. What we have found is the clearest indication of the likelihood of someone being involved in an accident. “


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