N.Y. Regulator Encourages Use of Telematics for Auto

The New York Department of Financial Services (DFS) today issued a bulletin to auto insurers doing business in New York urging them to adopt "usage-based insurance" (UBI) programs.

Under these voluntary programs, consumers can install telematics devices in their cars that—with the consumers' consent—catalog data on driving habits and provide discounts to those found to be more careful drivers.

The announcement by DFS Superintendent Benjamin Lawsky followed his approval of a program at Esurance aimed at helping parents prevent their teenagers from texting and driving.

Lawsky said under Esurance's voluntary program, policyholders may install an in-car device that, in conjunction with an Esurance app installed on their teen driver's phone, can limit the use of texts, emails, applications and phone calls while driving (with the exception of 911). The device can also catalog driving behavior, including speeding, hard braking, fast acceleration and other activities, Lawsky said.

Lawsky also said he has also approved telematics programs offered by a half-dozen other insurers including Allstate, Allianz, the Hartford, Progressive, State Farm and Utica National.

"Programs from additional insurers are currently under consideration," Lawsky said.

In a statement, Lawsky made clear that the New York DFS "is committed to the protection of consumer privacy." Therefore, he said, DFS has approved UBI programs only where they are offered to consumers on a voluntary basis. "Telematics programs can be a win-win for insurers and drivers. They can save policyholders money and save lives by making our roads safer," Lawsky said. "We encourage all New York auto insurers to submit plans to our department making use of this innovative technology."

Lawsky said, "UBI programs give less cautious drivers the incentive to drive more carefully, which can help reduce auto accidents." He said that as more customers gain better driving habits, an insurer can experience lower overall costs, which could lead to lower auto-insurance premiums statewide.