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Driving down your insurance premiums

‘There’s an app for that’.
Driving apps can be financially rewarding while contributing to greater road safety, but they allow the insurer to gather significant data about you. Image: Shutterstock

I needed to make drastic budget cuts to an already-thin budget this month and when I reviewed my car insurance in search of a lower premium, I found that, as with most things today, there’s an app for that.

One of the insurers I requested a quote from surprised me with a premium that was R1 300 cheaper than what I was paying.

Towards the end of the call, the consultant mentioned that I would have to download an app that would monitor my driving habits.

“Will this affect my premium? And do I have to install a tracker device?” were my first questions.

He assured me that my premium would remain as quoted, and that I would receive a refund or discount on the premium based on my driving habits.

I downloaded the app on a Saturday afternoon and two days later was already more conscious of my driving. And I’m not alone.

App options

Dialdirect introduced its driving app in 2017 with the catchy slogan ‘Do your thing, get back ching’.

Spokesperson Bianca de Beer says 71% of the top 5 000 most regular app users have improved their driving scores by 30% on average since its launch.

The best-rated drivers have logged 27% fewer vehicle claims than the poorest-rated drivers.

Precious Nduli, head of technical marketing and Vitality Drive engagement at Discovery Insure, says clients improve their driving behaviour by an average of 15% within 30 days of joining the Vitality Drive programme, and this improvement is sustained over time. “Between 2018 and 2019, we found that 59% of clients improved their driving behaviour with a corresponding reduction in the frequency of motor accidents,” she says.

Outsurance includes a SmartDrive feature on its app that monitors driving behaviour. Spokesperson Natasha Kawulesar notes that participation in the SmartDrive programme is voluntary.

How are insurers tracking your driving behaviour?

While both Dialdirect and Outsurance make sole use of an app on your cellphone to monitor your driving, Discovery uses a Vitality Drive sensor, which is installed in your car and interacts with its smartphone driving app.

Nduli points out that if you don’t have a compatible smartphone, you can use Discovery’s standalone tracking technology. “Both technologies allow clients to track their driving behaviour, but the Vitality Drive sensor and app combination allows for immediate trip feedback … which is better from a driver improvement perspective.”

Short-term insurance giant Santam seems to be lagging the field and requires you to install a tracker device in your car, without offering any monthly discounts based on driving behaviour. Head of personal lines underwriting Attie Blaauw says clients receive a discounted premium when they agree to a tracking device upfront and can use their driving behaviour statistics to negotiate a reduced premium when renewing their policy annually.

“We are currently in the process of building a big enough sample database to analyse and ultimately understand the behaviour in order to refine [their] rating,” he says.

Personally, downloading a free app that was instantly accessible on my phone was a win for me.

The only downside so far is that I have to remember to mark myself as a passenger when my partner drives my car. While he’s generally a more cautious driver than me, his foot seems to get heavy when driving my car.

Discovery also notes that if you’re a passenger in your own vehicle and use your cellphone, you should mark yourself as a passenger so that your cellphone use score isn’t negatively impacted for that trip.

How do the apps work and what do you get?

Driving habits typically monitored on the Dialdirect app include harsh acceleration, harsh braking, speeding, phone usage and night-time driving.

Vitality Drive monitors the same and also looks at harsh cornering and distance driven, as these factors are proven to predict accident risk.

Both Dialdirect and Discovery Insure offer feedback on every trip you make.

The following are screenshots of feedback I got from Dialdirect:

Needless to say, I started paying more attention to my driving fairly quickly:

Incentives

Dialdirect offers you a monthly payback of up to 75% of your premium, which is paid directly into your account – in my case, the maximum monthly payback is R740.84 and while the projected payback in the first two days was R246.95, it has since dropped to a projected payback of R123.47.

Discovery Insure drivers are incentivised through rewards, such as up to 50% back on fuel spend at BP and Shell or Gautrain spend. Clients also get up to 25% back on Uber spend, and up to 20% discount on tyres and car maintenance. Through weekly Active Rewards, clients can also earn Discovery Miles for meeting their goal of driving 100 incident-free kilometres.

Use of Outsurance’s SmartDrive app functionality qualifies you for a 10% discount on premiums. You can view your scoring on metrics such as distance travelled, speed and time of day of drives. Kawulesar says Outsurance is working on functionality to allow clients to mark individual trips as either passenger or driver. Until then, the app uses algorithms that identify changes in driving behaviour as an indicator that you may not be the driver but rather a passenger on a trip. 

Read: Don’t have your car insurance claim rejected over the silly season

The Dialdirect app is available to those who aren’t insured with it but wish to monitor their driving behaviour – perhaps a handy tool to keep a closer eye on the driving habits of your spouse or child behind the wheel? You also get points for participating in driver challenges.

The choice of whether or not to use a driving app for insurance purposes remains yours, but you should remember that agreeing to do so allows your insurer to gather significant data regarding not just your driving habits, but where you go, when you go, your place of work, the schools your children attend, the shopping centres you frequent, and more.

However, the Protection of Personal Information Act is expected to become law this year and will require companies to only keep data that is central to their purposes.

 
Listen to Nompu Siziba’s interview with Christelle Colman from Old Mutual:
 

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In 2013 there was an article stating that car insurance companies were “suppose” to lower premiums each year in line with the car’s value! WHAT HAPPENED TO THAT?? The other issue is, they will look for EVERY reason NOT TO PAY !!A great example is when this one company didn’t pay “OUT” when that MP got shot outside his gate. They FINALLY capitulated. I hear examples all the time . So even if you have insurance they may not pay. I remember when the newspaper reported on a few companies that were in the TOP 10 for not paying. Too bad we don’t have any journalists today that are willing to go there. Dr. Debt

Very true… The premiums actually increase as the years go by while the vehicle price decreases

Makes no sense

You’ll never win.Unfortunately in SA you must have insurance. We’ve had 3 of our claims turned down, but after ‘fighting’ with them they paid out.

Premiums can NEVER go down, just like your Eskom account or your DSTV account or whatever. The reason for that, is the application of Exponential Mathematics ( which the majority of Insurance brokers do not understand themselves-eish and one Insurer even advertises that your premium will come down monthly-eish again)- they do not understand mathematics. the main reason your premium mUST go up every year, is that repair costs of a vehicle goes up every year and 80 % of all claims are partial losses, which means your car has to be repaired. So please stay away from any Insurer who says your premiums will come down every year as it is not long term sustainable.

And the thing is that, while your car’s value does come down every year, with comprehensive insurance you may just hit a new Merc or Lambo.

I sat with a friend of mine who is an actuary and we went through this exercise.

1) Some brokers are just out there to keep your premium as high as possible. The lump their clients into different tiers and no matter what, you will now get out of that tier.

2) Related to point 1 – don’t be afraid to move brokers

3) Voluntarily opt for a higher excess – upwards of R10,000. Although this is a lot of money, you can ask the insurer for a much lower premium. Of course, the trade off is that it is now not in your interest to claim for any damages below R10,000, so the onus falls on you to drive smart. You do also have to have the R10,000 on hand, but this strategy covers you in the event of a major accident while lowering you premiums

End of comments.

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