Auto insurance

This posting is a reprise of an idea I put out in 2000. We were beginning to see the rise of "exchanges", Component models, interface based programming and other aids to distributed systems. I had 2 major interests at the time. One was in "edge" computing, the other in facades across business models.

I wrote a thought piece about auto insurance and a direct link between insurance and the vehicle. I was reminded of that piece by a TV commercial that I saw today. In the commercial, the car knew which insurance company was covering it, and if it didn't like the company, then it would find reasons not to go. In one case it ejected the keys from the ignition, in another it refused to unlock its doors and in the third case, the tires deflated.

The piece I wrote years ago also had knowledge between the car and the insurer, but had some more active features. For example, if we could envisage a car with multiple settings (the boring, around town go to work setting or the "boy racer" weekend setting, or others), then we could imagine having variable rate insurance - essentially the insurance premium is selected based on the car mode that is selected. If you never engage the "boy racer" mode, you never get charged that premium. So essentially we are looking at dynamic premium pricing based on a number of conditions all known about from the edge.

Lots of implications here. We could have a different key for each family member - or a key/thumbprint combo. If the thumbprint isn't a licensed (i.e. known to the insurance company) person, then the car doesn't start. So you could lock out unauthorized (friends of your children) drivers. What about speeding? The car knows that you have been speeding :-(. A car rental company (Acme) in Connecticut attempted to fine a renter for excessive speed. This was struck down in February 2002 by the Department of Consumer Protection. However, it may well be possible for insurance companies to use this kind of monitoring to assess premiums and to assist with accident "fault finding."

Lots of issues of course, but the key is to be thinking in these kinds of terms - where real time (or nearly real time information) can be used to guide decision making - especially pricing.