Study: Digital behavior could impact car insurance prices

INDIANAPOLIS (WISH) — Insurance companies use all kinds of information to decide how much you pay versus the next person. 

I-Team 8 has the scoop on a new study about possible changes to the way those companies decide what you pay. 

Car insurance companies call the things that determine what you pay “ratings factors.” Things like your age, where you live and your marital status help companies decide whether you’re a high-risk driver.

According to a car insurance comparison company, there is a new potential ratings factor on the horizon, and it has to do with what you’re doing online.

Most people tend to accept current ratings factors as fair. For instance, rates are higher for younger people than older people.

“I think it makes sense actually,” said Indy driver Richard McOmber. “People that are married tend to be more stable. Elderly people are more careful as drivers. They probably won’t drive as far. So, I think that married people and the elderly ought to get a break on their insurance rates.”

Those are some of the more obvious ratings factors: driving record, gender and age. But in today’s world, companies are finding new ways to measure your risk.

“A lot of that has to do with how you engage online,” said Alyssa Connolly, director of market insights at The Zebra. “We’ve been seeing other industries, other companies that use your digital footprint behavior.”

The Zebra is a car insurance comparison marketplace. Their researchers have seen this kind of “digital behavior” used by companies to set rates for things outside car insurance — such as financing. For example, when you shop online, Connolly said, some companies use information like what kind of device you use and the time of day you shop to set rates for loans.

The Zebra’s research said buying auto insurance on a desktop computer could save you almost $80 versus signing up on your cellphone or tablet. But, the increase in your premium for using an Android is less than the increase for using an iPhone. Having a Gmail address could cost you more than $100  extra while a comcast.net address would save you more than $200.

Would ratings factors like this for car insurance really result in people actually changing their online behavior?

“If consumers want to take those steps, then they can shop online in the morning versus wait late at night or they can use a certain device,” Connolly said, “but I think a lot of consumers wouldn’t want to make massive changes in their online behaviors.”

Connolly said these digital behavior ratings factors could be implemented almost instantaneously, but the insurance companies would have to go to state regulators to make that happen.

I-Team 8 reached out to the Indiana Department of Insurance and received this statement:

“The Indiana Department of Insurance has not been approached by insurers concerning the use of web behavior in rate setting. Indiana law provides that all rate classifications and rating plans must be filed with the Department and that auto insurance rates shall not be excessive, inadequate or unfairly discriminatory. 

The Department is aware of a practice called price optimization. Price optimization involves data collection and analysis to determine which consumers are more price sensitive than other consumers and the use of that information in ratemaking. In July of 2015, the Department published Bulletin #219, which prohibits the use of price optimization in auto insurance rating. Any insurance companies or insurance agents that fail to comply with the Department’s Bulletins or Indiana insurance statutes are subject to disciplinary action.  

Consumers who feel they have been treated unfairly by their insurance company can file a complaint with the Department’s Consumer Services Division. Once complaint information has been collected, the Department thoroughly investigates all circumstances and takes any appropriate action to prosecute or fine the company or agent if found to be at fault.”

The Zebra also shared some information about insurance here in Indiana:

• Indiana is one of the least expensive states for car insurance.
• Indiana average annual premium is about $1,133.
• U.S. average annual premium is about $1,427.
• Indianapolis average annual premium is about $1,146.

The Zebra also shared ways to save money on car insurance:

• Have a clean driving record.
• Maintain continuous coverage.
• Bundle with other policies.
• Raise your credit score.
• Take care of your car.