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For years, car insurers have figured premiums based on driving records, age, gender, marital status, where you live, and other factors. It’s a law of averages, both fair and not fair. Good drivers probably end up paying more than their due over their lifetimes. Accident-prone drivers probably end up paying less.

It could be all about to change.

Now, thanks to a partnership between SAP Canada, Baseline Telematics, and Industrial Alliance called Mobiliz, auto insurance companies in several Canadian provinces have the ability to determine premiums based on how their customers actually drive.

Here’s how it works. You put a chip—a small wireless device—in your car. The chip measures speed, acceleration, braking, and total distance travelled each month. If you drive safely, you’ll see your premium go down. If you drive like a proverbial bat out of hell, your premium goes up. Each month, you pay according to your performance during the previous one, and can improve your driving skills to lower your bill for the next.

SAP (my employer) provides the big data capabilities that make it possible to collect, manage, and analyse the massive amount of information the chips send in real-time.

This is just another way that mobility, and specifically machine-to-machine technology, is transforming an industry from the back office. And the insurance industry no less, which is traditionally very conservative, often even more so than banking.

Isn’t there some natural law about the most effective way to change people’s behaviour is by hitting them in the pocketbook? One of the hopes of the program is that the real-time feedback will help drivers, particularly young drivers, adopt safer driving habits on a large scale, which will result in fewer accidents overall.

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