Canadian company Baseline Telematics has launched a pilot program for the world’s first pay-as-you-ride insurance coverage for motorcycles. The program will be tested in Saskatchewan, a Canadian province with a public insurance system trying to find new ways to reduce the cost of motorcycle accident claims.
Usage-based insurance, also known as Pay-As-You-Drive (PAYD), uses information about how a vehicle is used to determine the cost of coverage. At its simplest, insurance companies would use vehicle mileage to determine how much to charge in premiums. The more you drive, the higher your risk, and therefore, the higher your premiums.
A more complex form of usage-based insurance uses telematics devices to record more detailed information such as location, speed and acceleration. Insurance companies can then use this information to determine how much to charge in premiums. Those exhibiting safer driving habits will see lower premiums while those taking higher risks face higher fees. PAYD systems thus create an incentive for drivers to adopt safer habits.
Several insurers already use usage-based insurance for cars, but none as yet use it for motorcycles which poses new challenges automobiles don’t face. Baseline Telematics’ pilot program with Saskatchewan Government Insurance (SGI), a state-owned insurer offering coverage in several Canadian provinces, will try to determine whether a PAYD system is even feasible for motorcyclists.
SGI faced some recent controversy earlier this year after trying to introduce measures that would increase insurance costs for motorcyclists by an average of 73%. Those measures were withdrawn after intense feedback from motorcyclists, so the insurer is looking at alternatives.
“We heard loud and clear from the motorcycle community that most motorcyclists are safe, responsible riders,” says Andrew Cartmell, president and chief executive officer of SGI. “Usage-based insurance provides the opportunity to recognize and reward these riders. It will also help promote safe driving habits among new riders, ultimately benefiting all road users in the province.”
The voluntary pilot program will only be used to gather data, and will not affect the insurance coverage of those taking part. The primary aim of the program is to help determine whether Baseline Telematics’ devices are compatible with motorcycles and face no issues with battery use or weather proofing.
Motorcycles also have different acceleration, braking and cornering characteristics than cars, so the program will determine what the normal ranges are for motorcycles. Cornering especially poses a different challenge for two wheels than it does with four. The program will also look at how cornering factors into motorcycle crashes.
“We are proud to have been chosen to work in close collaboration with SGI on this project” says Paul-André Savoie, president of Baseline Telematics. “Our UBI programs have already proven to attract better drivers and improve the driving abilities of all drivers. This project pushes our abilities into new markets in great need of lower insurance rates and improved combined loss ratios. Over 60% of motorcycle accidents are single vehicle, occur in daylight, on dry roads, while cornering. This trial will provide unprecedented information which will allow SGI to develop very innovative, cost effective and fairer insurance product.”
There are some downsides for usage-based insurance. Privacy is a prime concern, as telematics devices use GPS technology to determine where people are going. For its part, SGI says it is only interested in whether a motorcycle is driven safely, and not where riders have been.
The tracking devices do have a benefit. If a motorcycle with telematics devices is stolen, law enforcement officials may use the GPS data to track its location. For this reason, police will be allowed to subpoena data for investigating stolen vehicles or for accident reconstruction, but police cannot request information to find infractions.
For more information, visit SGIPilot.ca.