Recently, taxi drivers in New York and Philadelphia held a one-day strike to protest the installation of GPS systems in their taxis. They claim that the cost of the systems is excessive, but it has more to do with tracking the location of taxis. Soon, passengers will be able to view their progress on a screen. This is part of a larger trend to include GPS systems in all vehicles. For insurance companies, it's another opportunity to gather information about mileage and driving habits, also a growing trend.

GPS tracking systems have been part of commercial trucking fleets for years. They are now being installed in commercial auto fleets and other commercial vehicles. The information is used to record and analyze driving behavior. It is also used to assist in the recovery of stolen vehicles. This will help to calculate more accurately the risk for a particular commercial fleet.

School districts are also part of the trend. No parent wants to hear from the school district that the bus driver is lost and they have no idea where the bus is. School districts will know if a bus is stopped for an excessive amount of time and will be able to dispatch help. These systems also have the ability to define approved boundaries for a particular bus and create an alert if a bus deviates from its approved route.

The trend includes personal vehicles with such systems as OnStar® or other GPS options in higher-end vehicles. The availability of the systems will only increase, becoming standard equipment in all personal vehicles. Some insurance providers are already offering discounts to drivers that provide data from their systems. A few states are mandating a discount for vehicles that have GPS tracking systems, a trend that is sure to increase in the future.

For policy administration system providers, this presents both opportunities and challenges. The first opportunity is to manage this information and provide it to carriers as they need it. The second opportunity is to model the data to show trends. One of the challenges is to quarantine data when a vehicle changes ownership. Another challenge is that as GPS tracking moves from the commercial realm to the personal, privacy concerns will need to be addressed. Finally, we will have to adapt and respond to any regulatory changes. Navigating these waters can be tricky but will surely provide added value to insurers from policy administration system vendors.

By Howard E. Kennedy
www.iso.com

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