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Telematics: Helping Drivers Control Insurance Premiums

Posted by Roger Ryall


With Ontario insurance rates on the rise, individualized programs such as telematics, prove to benefit policyholders and society at large.

Auto insurance in Ontario continues to incline, positioning the province as having one of highest rates in the country. The average annual premium is $1,458, which according to the Canadian Press, is 55% higher than other Canadian provinces. As a compulsory service for Canadian vehicle owners, these rates can be a frustrating and expensive hardship. Usage based insurance, also known as telematic insurance, is a recommended solution that experts say can cut premium costs considerably.

Qualifying for Insurance

Current Ontario insurance rates are based on a group of statistical factors that evaluate and assess risk. General statistics including age, gender, and residential location, have been qualifying factors that impact premiums. Peter Cheney, national driving columnist, addresses how insurance companies base rates on patterns of age. Cheney states,

Consequently, individuals in the 16-to-24 group pay more, even if they’ve never been involved in an accident or received a ticket for a traffic violation. Essentially, young men are deemed guilty until proven innocent – at age 25.

Although this classification system is deemed to be unfair and biased to drivers, providing individualized rates hasn’t been an available option to all drivers. Cheney presents defence statements from manager of consumer and industry relations for the Insurance Bureau of Canada, Pete Karageorgos. In response to the so-called bias lens, Karageorgos reveals that discrimination is not the basis. He states that there is a higher rate of fatalities and serious injuries that involve younger drivers between the ages of 16 to 24 years old. Similar to age, other factors such as location has been known to increase rates significantly.


In response to the continued increase in Ontario insurance rates, a solution that provides an individualized assessment of driving behavior may benefit future drivers. According to the Digital Journal, telematics devices are used to track the behavior of drivers in order to base premiums on performance. Rather than referring to general statistics to determine a policy rate, drivers are eligible for lower costs if they exercise safe driving.

Telematics is referred to as usage-based insurance (UBI) or pay-as-you-drive, and is built on technological advancements and theories on habitual behavior. The Insurance Bureau of Canada (IBC) states that this technology tool is an effective way of lowering premiums. It assesses your rate based on the following factors:

  • Distance of travel
  • Time of day
  • Acceleration and braking behavior

The physical technology is an easy-to-install, small wireless device that is connected to the vehicle’s diagnostic port. As the car begins its route, information and data on the above factors is collected and sent to the insurer.

Benefits of Telematics

Insurance journalist, Lyle Adriano, states that the University of British Columbia predicts that 142 million drivers will adopt telematics by 2023. An individualized assessment tool that bases insurance premiums on driving behavior, is beneficial to the driver and society. The study conducted also found that drivers enrolled in usage-based insurance, were eligible for a 5% premium discount after just 26 weeks of driving. Research shows that those who volunteer are less likely to get into accidents as they actively exercise in safe driving practices.

However, the technology also benefits those who are involved in motor vehicle accidents (MVA). The data collected through the system reconstructs the events of an MVA, and can provide more accurate information to the insurance company. According to Insurance Business Mag, telematics is extremely beneficial in reducing fraud and assigning appropriate liability to those involved.

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