How does an insurance company increase its profits while lowering its rates and premiums? By attracting the safest drivers using a special insurance plan. This is the idea behind the insurance plan called Autograph, which is offered by Aviva Canada – one of the largest property and casualty insurance groups in Canada. This unique plan rewards safe drivers by confirming their safe driving behavior and rewarding them with lower rates.
When a driver signs up for Autograph, a data-gathering device is connected to the diagnostic port of their car. A diagnostic port is present in most car models released since 1996. The data-gathering device tracks the vehicle’s speed, the time of day it is driven, and the frequency of fast accelerations and sudden brakes. After a few months, the driver uploads the driving data onto their computer via a USB port. Autograph software scans the data and determines the amount of discount for which the driver is eligible. However, to protect the customer’s privacy, the uploaded information is not shared with Aviva, and the discount is not applied, until the driver approves it. Once the driver approves sharing the information, they receive an immediate 5% discount, and could be eligible for a discount of up to 25% depending on their driving behavior.
Of course, Aviva would not have implemented the Autograph plan unless it somehow benefited the company. Indeed, this plan has been successful at giving discounts to customers while increasing Aviva’s profits. Essentially, the buyers of Autograph insurance are involved in fewer accidents on average, so Aviva benefits from huge savings from reduced insurance claims. This is because drivers with Autograph insurance know that reducing dangerous driving habits (like sudden breaking) saves them money, so they are more likely to drive safely. The savings from reduced insurance claims outweigh the money Aviva loses from giving discounts. In the end, customizable car insurance is a win-win solution – by encouraging safe driving habits, it benefits the insurer, the driver, as well as the safety of the general population.
