Saskatchewan’s government insurer is piloting a telematics program to help resolve the issue of soaring motorcycle insurance claims costs in the province.
“It’s an innovative approach to pricing insurance,” SGI president and CEO Andrew Cartmell told Insurance Business. “All the research around the world with respect to telematics shows that it does change driving behaviour. People are more responsible when they have these devices, particularly when it means they save money on their premiums.”
Often called usage-based insurance, telematics devices are installed in vehicles to record driving information such as speed, braking, mileage and driving location in order to determine the risk of an insurance claim associated with a vehicle. SGI is taking steps to become one of the first insurance companies in the world to use telematics technology for motorcycles.
“I think anything that’s going to create fair pricing for motorcycle riders is going to be beneficial, rather than trying to paint the entire class with one brush just to make up the money that [the government insurer is] losing [on motorcycle claims],” said Jason Galon of Galon Insurance in Saskatchewan. “If you are a motorcycle rider, it’s a great idea.”
SGI came out with a projected average rate increase of between 57% and 128% for various forms of motorcycle insurance in an initial proposal to the province’s rate regulator this year. It has since capped motorcycle rate increases at 15% at the request of the government.
SGI has since formed a motorcycle review committee to find ways to reduce motorcycle insurance premiums for safe drivers.
Cartmell said research into a telematics program offered by Quebec insurer Industrial Alliance shows that the program resulted in a 70% premium reduction for young divers. Other research shows savings on the order of between 30% and 40%.
“What we don’t know is whether the program will work for motorcycles,” said Cartmell. “Motorcycles accelerate faster than cars, they brake faster than cars, so you have to do a program that is relative to motorcycles.”
The program SGI is contemplating would not have devices attached to a dashboard, as in cars. Instead, motorcycles would have to be taken to the shop to be hard-wired for data collection. The process would cost roughly $100, with a $5 per month fee for monthly monitoring.
SGi is looking to see approximately 800 to 1,000 motorcyclists in the program, depending on when the government insurer can get the devices and how quickly the program can be up and running.
Premiums would not be altered for the motorcyclists participating in the program. The pilot program would simply collect driver data this season to help the government insurer get a better understanding of how to price the product.
“The idea is to separate the safe motorcyclists from the riskier or more aggressive motorcyclists so that we can encourage safer driving,” said Cartmell.
