N.Y. Encourages Auto Insurers to Adopt Telematics Programs

New York’s Department of Financial Services (DFS) issued a bulletin on May 27 to all New York auto insurers encouraging them to adopt “usage-based insurance” (UBI) programs.

Under these voluntary programs, consumers can install “telematics” devices in their cars that – with the consumers’ consent – catalog data on their driving habits and provide discounts to those found to be more careful drivers.

A telematics device, when installed in a driver’s vehicle, can record and upload various forms of data pertaining to driving patterns, such as a driver’s acceleration and braking patterns, the number of miles a vehicle has driven, and the time of day a driver drives.

DFS said insurers can use such data to provide discounts to already careful drivers, who are less expensive to insure. At the same time, UBI programs give less cautious drivers the incentive to drive more carefully, which can help reduce auto accidents.

DFS said that as more customers gain better driving habits, an insurer can experience lower overall costs, which could lead to lower premiums statewide.

DFS Superintendent Benjamin Lawsky said telematics programs can be a win-win for insurers and drivers. “They can save policyholder money and save lives by making our roads safer,” Lawsky said. “We encourage all New York auto insurers to submit plans to our Department making use of this innovative technology.”

DFS said it is committed to the protection of consumer privacy and has approved UBI programs only where they are offered to consumers on a voluntary basis.

DFS said one innovative telematics program that the department has already approved at Esurance helps parents prevent their teenagers from texting and driving.

Under Esurance’s voluntary program, policyholders can install an in-car device into their teen’s car that, in conjunction with an Esurance app installed on their teen driver’s phone, can limit the use of texts, emails, applications, and phone calls while driving (with the exception of 911). The device can also catalog driving behavior.

DFS has also approved telematics programs offered by a half-dozen other insurers including, Allstate, Allianz, The Hartford, Progressive, State Farm, and Utica National.

Regulators said programs from additional insurers are currently under consideration.