I had the honor of presenting with a friend and former colleagueat the Insurance Telematics USA 2011 conference in Chicago. A largefocus of the conference pertained to using event data recorder(EDR) and onboard diagnostic port (OBD II) devices to gatherdriving-habit data to more accurately underwrite risk.

Several presentations (including ours) related to usingtelematics to determine liability. This topic proved to be the buzzof the conference. Even during breaks, I joined in severaldiscussions and was surprised at many insurers' comments. Havingcome from a claims background, I asked several insurance-carrierrepresentatives if they had a claim policy for obtaining permissionto extract and use EDR or "black box" information in their claimshandling. Not many knew of such a policy and most were handling iton a case-by-case basis.

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The flaw with this approach is that by the time the severity ofthe claim is known and the presence of an EDR is verified, thechain of custody of the vehicle and that information may havebecome murky, and the evidence can then be challenged asinadmissible. This is especially concerning given recent data fromthe Association of Trial Lawyers indicating that the odds of atleast one vehicle in a severe accident having harvestable accidentdata are about two in three. While even today not all vehicles haveEDRs (notably German and many Japanese vehicles do not haveharvestable EDRs), the majority of 2005 and newer vehicles will beequipped with them. 

The National Highway Traffic Safety Administration has proposedrules around standardizing use of EDRs, and Senator JayRockefeller, D-WV, introduced legislation this year to require anEDR in all vehicles sold in the U.S. by 2015—so we as an industryshould address the issue now. Currently 37 states do not have anyregulations granting permission and admissibility of EDR data inclaims settlement, but the remaining 13 do.

So I pose the following questions: Do you know which states haveregulations? Does your company have a state-specific handlingprocedure to identify a potential vehicle with an EDR; put steps inplace to preserve the evidentiary chain; and harvest and interpretthe data?

Statements and opinions expressed in this blog are solelythose of the author.  They are not offered as and do notconstitute legal advice or opinion of Mitchell InternationalInc.