How do you improve poor driving habits to lower risk and get a better insurance rate? This is a question the Facility Association (FA), a non-profit association of auto insurers operating across Canada, has sought to answer through its first telematics program.
FA has partnered with Toronto-based technology firm Foresight Insurance Analytics to launch a video-enabled telematics scheme for taxi drivers in Ontario. Drivers who sign up for the program, effective December 1, will qualify for an incentive reduction in premium.
“Poor driving habits or behaviours are often why drivers end up in Facility Association, and it’s also why insurance premiums are higher than the standard market,” said Saskia Matheson, president and CEO of Facility Association.
Taxi drivers will receive a daily driving score based on multiple incident types interacting with each other through the telematics devices. These incidents include risk factors such as red-light violations, distracted driving, following too close, lane violations, hard or late braking, weaving in and out of lanes, and harsh turning.
Addressing privacy concerns, FA said it would only receive the driver scores. Foresight Insurance Analytics would install the telematics devices and manage all the data.
The scores allow taxi operators and owners to monitor lousy driving habits and encourage improvements. FA hopes that with improved driving, many taxi drivers will soon be on the road to the standard market.
“FA is not meant to be a permanent home for an insured. It’s meant to be a temporary stopover. Our intent is to get that individual back into the standard market, where they would enjoy more choice from insurance providers and potentially a much lower rate,” Derek Tupling, vice president of communications at FA, told Insurance Business.
Tupling said there are several reasons drivers end up with FA: “The first is you may have a poor driving record due to a couple of accidents or other driving infractions, and you can’t find insurance in the standard market. The second reason is some insurance companies might decide that a certain segment of business just isn’t something they want to entertain anymore as a part of their book of business.”
The association’s taxi market share has increased in Ontario, despite fewer taxis on the road during the pandemic. COVID-19 only worsened the difficulties of taxi drivers and companies, with the taxi business in FA’s books surging between 2019 and 2020.
“The trend started at the onset of the pandemic and continues to be a concern for FA as we strive to enhance market stability by minimizing our market presence,” said Fadia Charbine, vice president of underwriting, claims, and operations at Facility Association.
Taxi drivers are required to have 24-hour commercial insurance, but due to the high-risk nature of the service, owners and operators are forced to pay hefty premiums or keep their fleet off the road. Taxi drivers who own their cars are facing annual premium renewals of about $9,000 this year, compared to about $6,500 to $7,000 last year, Ottawa Citizen reported, citing the Canadian Taxi Association
Facility Association becomes the “insurer of last resort” for taxi drivers who can’t access standard auto insurance. But facility insurance costs as much as twice or thrice the amount of premiums compared to regular auto insurance. FA writes nearly 100% of taxi business in Atlantic provinces such as Nova Scotia, New Brunswick, and Newfoundland.
“When we were approached about this idea for a telematics program to help a particular segment of business, we jumped at the opportunity,” Tupling said. “There are also other opportunities provided through Foresight [Analytics] for one-to-one coaching. An individual can engage with a coach who can provide other helpful tips through the program.”
Telematics typically factor in usage-based insurance, which is not a new venture in Canada. The country’s first telematics program for auto insurance launched in 2013. The hyper-individualized model continues to gain popularity as it allows insureds to pay lower premiums depending on their driving behaviour and mileage.
“We’re optimistic that there’s going to be a lot of uptake within the taxi industry. The program is an opportunity to earn your way back into the standard market by correcting poor driving habits,” Tupling concluded.
FA plans to explore opportunities to implement its telematics program in other provinces following implementation in Ontario.
