Device could cut car-insurance bills

Waterloo firm's technology tracks where you drive and at what speed

RON DERUYTER, WATERLOO (Dec 24, 2005)

A Waterloo company has developed technology that could help drivers reduce their car insurance payments.

Installed in the glove box or under the dash, the device tracks when and where you drive and how fast. If the data proves you are a low-risk driver, you could get a discount from an insurer that offers usage-based insurance.

"We're very excited about this," says John Reynolds, vice-president of business development at IMS Applied Intelligence, a small firm that develops electro-mechanical devices that incorporate sensors and intelligent software.

"We think we are in a pretty good position to offer this technology to insurers around the world."

Winterthur Group, a large insurance group in Germany, announced this week that it is doing a pilot project with customers after testing the technology on its employees' vehicles.

Insurers in Canada and the United States also are doing pilot projects with their staff, but Reynolds says it's too early to identify them.

The device, dubbed iPaid, which stands for I Pay As I Drive, uses global positioning system technology to track the vehicle's location and record the time of day it is being driven. Software calculates its speed. "You can see their speed and where they went, and whether there was sudden acceleration or sudden braking," Reynolds says.

Insurers won't nail drivers for occasional lapses, he says.

"If someone is doing 120 or 130 kilometres an hour, that's not a concern. The concern is someone doing 130 all the time, or doing it in residential areas. They are looking for patterns."

Motorists who drive less than average, don't speed or aren't on the road at times accidents are most likely to happen, will get insurance discounts.

"The little old lady who drives once a week to get groceries and drives at the speed limit is going to get a huge discount," Reynolds says. "But someone like me who drives 200 kilometres a day and goes with the flow of traffic on the 401 is not going to get a discount at all."

Data for individual trips is stored on a key in the device. The device beeps when it's time to remove the key -- perhaps once a month, depending on your insurer's policy -- and upload the data to a secure server at IMS. (You do that by plugging the key into the USB port on your computer.)

You can see the data and print out trip logs and maps of the routes you travelled at a password-protected website. It's up to you whether you forward the information to your insurer.

"The consumer owns the data," says Reynolds, a Toronto resident who joined IMS in August after years in sales and marketing in the banking industry. "If you choose to give it to the insurance company, you are eligible for a potential discount in your next premium period."

IPaid isn't the first technology designed for usage-based insurance. Aviva Canada's Autograph program uses the Car-Chip, developed by Davis Instruments of Hayward, Calif., to track distance, speed and time of day. Launched in Ontario in March, it offers discounts of up to 25 per cent.

Reynolds believes iPaid is better technology because it identifies location, has added security features and can be used with all vehicles. CarChip doesn't work with vehicles built before 1996 and certain later models.

IMS encrypts the data throughout the data collection and transmission processes. Data can't be pulled off a stolen or lost key and the company is notified if the entire device is stolen because thieves can't remove it without cutting an anti-tamper cable.

"We really believe this gives us a competitive advantage, especially since privacy is such a hot topic," Reynolds says.

"People say, 'You are tracking me.' Yes, we are tracking you, but the data is encrypted and we have done this and this and this to protect you," says Reynolds of IMS Applied Intelligence.

The device, unlike "black boxes" installed in new vehicles, doesn't capture enough information to reconstruct what happened in an accident, so it won't be used for legal purposes, he adds. "We are the least of anyone's worries in that regard."

Occasional, low-mileage and young drivers (more realistically their parents) are the main markets for iPaid.

The technology makes it possible for motorists who don't drive a lot to pay less for insurance, Reynolds says, adding that car ownership becomes more affordable for people with low incomes because they usually drive less.

The device helps young drivers understand how their driving habits influence insurance rates, he says.

That's the attraction for insurance companies, Reynolds says, noting that people are most likely to switch insurance providers when their kids start driving and their premiums rise.

IMS, founded in 1999 by two University of Waterloo engineering professors, plans to sell the device to insurance companies. However, the main source of revenue will be the fees it gets for running their iPaid websites and processing reports for clients.

The company, which employs 45 people, including 41 engineers, also is launching a commercial version that will sell for $349 or $299 US.

Branded DriveSync, it is geared to motorists who want to track their driving, or the driving of their teens, but don't want to pass on the information to their insurance provider.

Companies that have small fleets and want to monitor their drivers, but can't afford cellular technology are another market, says Reynolds.

IPaid and DriveSync complement IMS's other products, which include seat-belt reminder systems, occupant weight sensors and occupant classification systems, used to control the deployment of car air bags.

Together with Ridetones, which allows customized sounds for functions such as the alarm and remote keyless entry systems, they increase the company's involvement in telematics, the integration of computers and wireless telecommunications.

"We are strong on the automotive safety side of things," says Otman Basir, the firm's co-founder and chief executive officer. "Now we are working on the telematics side of things."

rderuyter [at] therecord.com

 

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