How likely is it automakers will upend the auto insurance industry by selling car insurance directly to their customers? It is not a far-fetched concept, and if it comes to fruition, what will it mean for Canadian drivers who want the best auto insurance rate they can get?
In the U.S., electric auto manufacturer Tesla, as well as Volvo and Porsche, are beginning to offer auto insurance in some states. It’s early days, but as carmakers look for new ways to upsell to their customers, it could alter the auto insurance landscape in Canada should automakers get permission to follow suit here.
But it begs the question: would Canadians trust auto manufacturers more than insurance companies to come to their aid if they are in a car accident?
Self-Driving Cars and Auto Insurance
Meanwhile, self-driving cars, or autonomous vehicles, will inarguably change the face of auto insurance the world over whether carmakers get into offering auto insurance or not. Some predict driverless cars will sound the death knell for the auto insurance industry despite the fact these vehicles are still in the development phase and may be for another decade or more.
But how likely is it for autonomous cars to become commonplace in Canada? Consider Uber’s transformation of the taxi industry and Airbnb the hotel industry, and it's conceivable self-driving cars may at some point disrupt the auto insurance industry too.
In any event, the expectation is driverless cars will make our streets and highways safer by preventing collisions and property damage, speeding, and distracted driving. Should they live up to that lofty goal, the day may come when we see driverless cars cruising Canada’s roads regularly. However, there are no guarantees a driverless vehicle will be safer than cars driven by humans. A pedestrian fatality in the U.S. involving an autonomous Uber SUV in 2018 shows the technology powering these vehicles has a way to go.
Self-driving vehicles or not, it is plausible carmakers may move into administering auto insurance even if the underwriter is a third party (in other words, an insurance company). How readily Canadians would buy auto insurance from a carmaker is one of many unknowns. If a 2018 Ipsos survey of Canadians’ opinions on electric vehicles and self-driving cars are any indication, it is fair to assume most Canucks are likely to stick with what’s familiar initially.
Of Data Security and Personal Privacy
Besides, the notion of automakers peddling auto insurance to their customers also raises questions about Canadians’ privacy and data security.
Though auto manufacturers have the proprietary telematics and other data they would need to assess risk effectively by gauging how you drive, how often, and where, the data they collect is a severe privacy risk for individuals. The vehicles we drive today are not immune to hackers, which ratchets up security and privacy concerns a notch when considering the rapid pace of technological advancement in vehicles.
Whereas insurers adhere to regulations concerning the telematics data they collect from willing customers, there are no regulations for automakers in Canada today that govern what data they can collect from the vehicles we drive and how they use it. Honestly, who reads the fine print on a sales contract on a new car?
We may be at a turning point for driving surveillance. Provincial auto insurance regulators like the Financial Services Regulatory Authority of Ontario and the Alberta Automobile Insurance Rate Board need to address this issue before giving carmakers the green light to sell auto insurance policies.