Marginal Revolution tells us about a not-so exciting new trend in auto insurance: discounts on premiums based on 'voluntary' electronic monitoring of your driving habits.

In two new tests, car owners will be able to let insurance companies monitor their driving via new technology in exchange for lower rates. The technology will track some combination of when, where, how far and how fast they drive, giving insurers a way to reward low-risk driving. Now just experiments, the technology might be a glimpse of the future of car insurance.

How about this? In Minnesota, where the highway speed limit is 70 mph, drivers who go over 75 less than 0.1% of the time get an extra 5% discount. Drivers who avoid the most dangerous times — midnight to 4 a.m. on weekends — get bigger discounts than those who don't.

Not surprisingly, one of the experiments is in Great Britain, the land of near-universal surveillance (I'm still waiting for those camera-based speeding tickets to arrive from Scotland). Insurers on both sides of the Atlantic are watching the experiment closely. [continue reading "What Price Lower Insurance Rates?"]

How about life or health insurance discounts based on electronic monitoring of a customer's vital signs and their eating, sleeping and exercise habits?

Wouldn't this be a lovely scenario? "Mr. Smith, this is BigBro Insurance Company calling. Our remote monitoring system has informed us that last Friday evening, you ingested what appears to be a 16-ounce porterhouse, an 8-ounce baked potato with sour cream, and three glasses of rather cheap red wine. We recorded a similar bodily intake contract violation two weeks ago, and our records show this month you haven't had the required amount of aerobic exercise specified in your policy. Do you understand your premiums will now increase by 20% next month?"

I'm with Tyler: "Nein, danke." What's most disturbing about this story is that it's yet another example of how consumers seem incredibly willing to concede privacy rights to corporate interests - yet these same people would scream bloody murder if the government took steps to enact similar surveillance methods.

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