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OEMs aren't just connecting cars for the fun of it; the idea is to actually improve their customers' experience with the cars. But right now, we're still missing an actual killer app—and to be honest, data on how many customers renew those cell contracts for their vehicles. A survey out this week from Solace that polled 1,500 connected car owners found that they still don't really trust the technology.
[...] But the bit of Solace's survey I found most interesting was the widespread ignorance regarding data collection. Only 38 percent of connected car drivers knew that their cars could store personally identifiable information [PII] about them, with 48 percent unaware this was the case. And that's important because that PII is being viewed as a goldmine.
[...] "[The fuel companies] want to offer you more than fuel," [Ben] Volkow said. "Many times, the fuel stations are also interested in anonymized data—why do some people always stop, do they take whatever's available or a specific brand, places to build new stations, and so on."
What's more, unlike selling cars, selling data is a high-margin business—between 80- and 90-percent profit. "A big part of the investment is already done," he said. "The databases are built, SIMs and modems are in the cars; they've crossed the Rubicon."
[...] Volkow thinks that drivers will be happy to share this data, as long as they get some value out of it, like free servicing or micropayments per mile traveled. But he also thinks consumer education is vital. "People tend to be more demanding when it comes to cars; they don't think of them as the same as mobile devices. You have to convince them there's a benefit," he told me.
Source: ArsTechnica
(Score: 0) by Anonymous Coward on Saturday February 24 2018, @03:08AM (8 children)
And thus, insurance will no longer be insurance but it becomes a savings account because when you know how much 'insuring' X will cost you, you'll make damn sure that the owner of X contributes more than that because like heck are you ever going to repay him more than what you made him contribute. Welcome to the world...
But, hey, the free market works, amirite? The customer benefits from the free market, amirite?
(Score: 1, Insightful) by Anonymous Coward on Saturday February 24 2018, @03:17AM
Since car insurance is mandatory in many states, governments have a responsibility to outlaw such abusive behavior. Yeah, I know, it's too funny.
(Score: 3, Informative) by Runaway1956 on Saturday February 24 2018, @03:21AM (2 children)
Not sure if I'm reading your post correctly. An insurance policy basically is a "savings account" today. That account is in the insurance company's name, and the insurance company invests that account into it's portfolio. That is, your money doesn't sit around in a coffer somewhere, the company is using that money to make money. But, of course, you have no right or title to any of that money, nor to the profits gained by that money.
Of course, if you have enough money to put into a proper "savings account", you may become self insured. Trucking companies do that routinely. The insurance companies were skirting the edges of being to damned greedy, and raping the trucking companies. So, even smaller companies found it to be more profitable to put a few million dollars into an escrow account, and become self insured. Of course, there is risk involved. If you are operating twenty trucks, and you have the minimum in escrow to cover all those trucks, then you suffer several accidents, you can be wiped out. Liability for truck accidents gets outright crazy - especially because there are ambulance chasing lawyers who jump into every truck accident they discover. The same injuries that might cost 100,000 in an auto accident are pumped up to millions if a truck is at fault.
(Score: 4, Insightful) by AthanasiusKircher on Saturday February 24 2018, @05:38PM (1 child)
I could be wrong, but I think AC's point is that in the past, insurance was often used for exceptionally unlikely events -- the kind of events that, for example, not every person would expect to occur within their own lifetime.
For example, let's say the chances of having your house burn down to have a catastrophic loss that would require complete re-building happens to 1 in 30 people over the course of their lifespan. (I took a look at some internet links, and that seems a reasonable ballpark figure.) It doesn't make sense for the average person to try to save that much money, because for most people, the event will never occur. (Lesser fires that still cause significant damage are more common, but the average cost from a home fire appears in the $20,000 range, an order of magnitude lower than a complete home replacement on average, and something that could potentially be saved for by more people.)
Point is that insurance companies often were intended to cover that sort of catastrophic unexpected event. If 1 in 30 people suffer a complete loss to their home in the course of a lifetime, and that loss averages say $300,000 (including cost of rebuilding and lost goods), insurance companies would need to charge $10,000 over a lifespan on average to break even for a catastrophic fire policy. Of course, they have overhead and various other costs, so maybe they need to charge $15,000 or even $20,000, but the point is that they don't need to charge $300,000 from a single customer.
AC's point seems to be that insurance companies in some circumstances are no longer operating like that -- i.e., as pooled risk managers of a pool of money -- but rather insist on charging more than a customer would ever be likely to take out, regardless of that customer's actual chances of having a catastrophic event in their lifetime.
That seems unlikely to happen, so insurance companies aren't really "savings accounts." For car insurance, for example, most people tend to think of their coverage for collision or comprehensive and what happens if their car is totaled. But that's not really why you NEED car insurance. You NEED car insurance for liability and such, in case you get sued and owe someone hundreds of thousands of dollars for injuries or damage. Every reasonable person should be able to "self-insure" for the cost of replacing their own car... if you can't, you're probably buying a car that's too expensive for you to afford and/or have problems saving money in a reasonable fashion. But you can't necessarily anticipate a freak accident that could hold you liable for hundreds of thousands of dollars in injuries/damage, and most people certainly can't plan for that from a financial perspective.
THAT is the most essential reason for insurance -- to pay out in cases where an individual could never be reasonably expected to afford the cost of a one-time catastrophic financial event. Otherwise, yes, insurance for lesser things often does function as a sort of "savings account."
(Score: 1) by toddestan on Sunday February 25 2018, @04:41PM
What the insurance companies are trying to do is to determine what each individual will cost them over their lifetime, and then charge that individual that much (plus overhead, etc.). It will never be perfect obviously, but the more data they can slurp up, the better profile they can build up on individuals.
To use your example, they may have considered house fires basically random - sure, they could adjust their rates based upon things like geographic areas knowing broad factors like climate, lightning strike risks, and things like that. But other than that they really didn't know who's house would be the one that catches on fire.
Now with big data, they can actually build up profiles. Do any of the occupants smoke? Do they park their car in an attached garage (small, but a bigger risk than most would think)? What's their power usage like - high power usage probably means higher risk of electrical fire? What kind of heat does their house have? Do they buy lots of candles? How old are their appliances? Do they buy a Christmas tree every year? Do they cook a lot, or do they buy lots of TV dinners or eat out? Etc. Based upon that and factors you would have no idea about, you could suddenly end up paying a lot for your fire insurance. Or maybe even find that no one is willing to insure your house.
Same thing with automobiles - Where do you drive? How often? What time? How fast do they accelerate? How hard to they use the brakes? How fast? Are they using their cellphone while driving? How often do they fiddle with the infotainment system? Are they along or with passengers most of the time? What kind of music do they listen to? How loud? Do they use their turn signals? Do they use cruise control? etc. They more data they can slurp up, the less it's going to look like insurance and the more they'll turn it into a savings account.
What's truly scary is health insurance. At least a lot of the stuff above is things that you have some control over, or behaviors you can modify. But the same thing applies to things like cancer - right now it's essentially random to them. But if they can get a hold of your genetic information and start sorting out the people who will likely cost them a lot in expensive medical treatments, they could end up creating a large group of people forced to pay outrageous rates for health insurance - or may even find they are uninsurable. All for something that they absolutely no control over and cannot change.
(Score: 1) by khallow on Saturday February 24 2018, @06:56AM (3 children)
Actually, welcome to insurance. It never operated any differently than that.
(Score: 0) by Anonymous Coward on Saturday February 24 2018, @07:08AM (1 child)
Commercial insurance providers operate like that, but the concept of risk sharing started with shipments split over different boats to lessen the individual risk of one sinking.
(Score: 1) by khallow on Saturday February 24 2018, @07:49AM
Ok. Not seeing the point of that, but actual risk sharing behavior probably goes back tens to hundreds of millions of years. For example, having a zillion offspring makes each one less likely to survive, but increases the odds that some will survive to propagate their genes onward.
(Score: 0) by Anonymous Coward on Saturday February 24 2018, @02:04PM
"an insurance policy basically is a "savings account""
No it isn't. An insurance policy is a ponsi scheme, where you've agreed in advance to loose all your money except in certain very specific circumstances.