Car insurers are using IoT to cut costs

The Internet of Things is being used by car insurance companies to cut their costs, a new study by UK's Business Insider shows.

The study says car insurance companies are using various dongles inside the car to learn more about a driver's habits. That way the companies can better assess different risks and offer different insurance models.

Basically, you can prove you're a good driver that doesn't get involved in many accidents every year and get a better offer from your insurance company.

“Auto insurers like Progressive, Allstate, and State Farm are using the Internet of Things (IoT) to monitor drivers' habits, including changes in speed, how often they drive, and the time of day they drive,” Business Insider says.

The most prevalent way of monitoring driving habits is by using On Board Diagnostic (OBD-II) dongles, or plugs, that send analytics about the driver's driving habits back to the insurance company. The dongles are plugged into the car's port under the steering wheel.

Business Insider estimates that there are 155 million cars currently on the road in North America that are compatible with OBD-II dongles, and this number will grow as cars from prior to 1996 are pulled off the road and replaced by new models.

The report says that auto insurers are the leading adopters of usage-based insurance models, that they’re offering clients the opportunity to potentially lower their premiums, and that the IoT is helping other insurers reduce the risk and mitigate costs.

The full report can be found on this link, after you have signed up for a free trial.