Cute animals…catchy jingles…risky stunts…insurance companies will try anything to incite you to switch, or at least review, your car insurance every year.
It is true that spending some time comparing car insurances or renegotiating your current insurance could save you some serious cash.
But, it is also true that it takes a bit of time. That’s why most people don’t do it.
And, even if they do, once they lock in a deal it is a price for a whole year, no matter if their circumstances change or how much they drive their car.
But, what if you could leave that decision to your car?
This is something IOTA showed could be possible in a recent technology event in Canada.
If you are not familiar with IOTA, it is an open source distributed ledger looking to work with the Internet of Things (IoT). IoT are everyday devices that are connected to the internet like printers, toasters…and cars.
According to Statista, there are 23 billion connected devices to the internet today, and that number could more than triple by 2025.
At time of writing, IOTA is the 12th largest token by market cap. IOTA is looking to make life easier for us by allowing feeless microtransactions between IoT devices.
IOTA works differently from Bitcoin or Ethereum in the sense that it doesn’t use blockchain to do this. It still uses some of the same principles but instead of using blocks in a chain, it uses the tangle, which makes transactions faster than blockchain.
You can see how the tangle is different to the blockchain in the diagram below.
Source: IOTA Support
But, back to car insurance.
What IOTA showed in their proof of concept was how choosing car insurance could be radically different to how it is today.
IOTA changing the car insurance landscape
The thing with car insurance is that the data car insurance companies collect is very general. They give you savings depending on your gender, age, how much you drive your car, where you park.
But the truth is that they really have no idea how well you drive.
During their presentation, IOTA showed how the car could instantly switch to the best car insurance at the time using real time data.
They have three different basic types of states for the car: parked, tortoise insurance (best rates as long as you don’t speed) and BF rocket insurance (when you want to drive fast).
As the driver drove around in the Tesla, the car chose the best insurance possible for each of the state offered at the time and paid with IOTA. You could actually see the car making all the decisions and switching around to insurances and paying in real time as it drove.
The idea is that if the car is parked or if you drive safer you save more on insurance. It can also take into consideration the weather, the time of day…you name it. So, risk is priced and allocated in real time.
It’s an interesting idea. If your car spends most of its time parked then why shouldn’t you pay less insurance for it?
I mean, this could change the whole way we do insurance. It also forces insurance companies to compete for providing better rates.
You could easily apply this to share or rental cars, where you could pay less for insurance depending on how you drove.
IOTA’s proof of concept gives you an idea on how these new technologies can apply to real life and change our daily routines.
The negative side of this is that you would have to be ok with being watched the whole time you drove. Would you be happy to get tracked to pay less car insurance?
I’m not sure if I would make the trade-off.
As I wrote on Friday, organisations are already adopting Bitcoin’s blockchain — a distributed ledger — to modernise payment systems.
But, there are a plenty of applications for these technologies.
Decentralised systems are quickly showing us how we can change from making transactions that need a trusted party to validate them, to automated and fast transactions without a central authority validating them.
And things are changing fast in this space.
It is too early to tell which ones will stay on and which ones will fail along the way. In this race, there will be some winners, but also plenty of losers.
Whatever the case, my point is that it is looking like big data and digital are driving the future. And the next years promise to be quite interesting in this area.
Editor, Markets & Money
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