Don't get me wrong, there's definitely a bit of "but we can charge more" baked into the pricing models, but that tends to go in as a completely separate "we can charge more" line item within the internal model. This if nothing else is because in the UK the Financial Conduct Authority have an extensive list of things you can not price on, regardless of whether your models show they're indicative of a greater risk. The FCA don't care if you're charging more than you have to, but they will tear you a new one if you're shown to be breaking the rules.
It gives the insurance company a way to identify a lower risk group of drivers so they can charge that group lower prices.
But it's not hard to see how nearly 100% of people who drive recklessly would avoid such programs, but less than 100% of good drivers would.
The statistical skew makes sense to me. I doubt that insurance companies are assuming that every driver who doesn't take part in such program are bad drivers, but insurance is purely a game of statistics.
Is that true? The handful people I know who have/had these devices are definitely wouldn’t fit that category. And most removed it after a while because their premiums went back up (because of their driving). They just chose it because it offered cheaper rates and they all said the companies promised it would not raise rates above what they were already paying. So it was a “what do I have to lose” decision.
Obviously anecdotes aren’t data. I think it makes sense that the drivers that are egregiously unsafe (and know it) will avoid them. But it would take seeing actual data to make it clear to me that the majority of people who consent are safer drivers.
Insurance companies complete on actuarial accuracy. I'd rather bad drivers pay more, and be in incentivized to drive better, than young drivers and all drivers pay more.
That may be easy: there is a lot of competition in the market. If one company raises their rates too high above others, it is very easy to switch. Lots of people switch every few renewals, chasing a cheaper price.
With the individualized data, they can selectively raise their rates and either take more in from those customers, or get them (and just them) to flee. All without having to wait until _after_ an accident.
