A decision by Nova Scotia's regulator will soon allow a major insurance company to offer drivers a potential discount in exchange for tracking their habits behind the wheel through their mobile phones.

Intact Insurance sought permission from the province's utility and review board to offer a mobile phone app that tracks things like hard braking, rapid acceleration and nighttime driving using GPS function.

The board approved the application Aug. 4. 

"It's something that's relatively new to our region but we have seen it pop up across Canada," said Tom O'Handlay, manager of government relations for the Insurance Bureau of Canada's Atlantic division.

"It just gives the industry a way to be more innovative, and it gives them another way to reward drivers who have positive driving habits or good driving habits and perhaps offer them reduced insurance rates on account of that." 

No device cost

​Intact said customers who take part in the program could save up to 25 per cent on their auto insurance premium, based on their performance.

For several years, some insurance companies — including Intact — have offered small devices that plug into vehicles to monitor driving habits. However, Intact told the utility and review board that it is developing an app-based model instead.

Other insurance companies in Ontario and Quebec have also begun to offer apps instead of the plug-in "dongles." 

"Intact explains that the costs associated with the dongle, including the loss of devices that are not returned, can be significant," board member Murray Doehler wrote in his decision. 

"With the use of the app, there is no device cost. As well, the concern about the loss of the measuring device is eliminated." 

App available next month

Doehler noted in the decision that an app would be linked to the main driver's phone and only record driving habits when that person was behind the wheel. The dongle measures all drivers who get behind the wheel. 

In an email, an Intact spokesperson said the company plans to launch the app in Nova Scotia by late September. It said more than 350,000 people nationwide have tried the dongle program, which was introduced to Nova Scotia in 2014.

Intact has about one-sixth of the Nova Scotia market, according to the board decision. 

The Office of the Information and Privacy Commissioner for Nova Scotia said in general it encourages consumers to ask questions before allowing companies to collect personal data, such as what's being collected and how it will be used, secured and shared. 

Protecting personal information

That's a sentiment shared by Vincent Gogolek, executive director of the B.C. Freedom of Information and Privacy Association. 

"There could be issues involved with what other information does the app collect? Because a lot of us have a lot of our lives on our phones," he said. 

However, Gogolek said the insurance industry has so far done a "fairly good job" in terms of making sure personal data is being used properly. 

"The insurance industry, because it's regulated, before they're actually able to introduce these technologies ... they have to go in front of somebody and justify themselves. Which acts as a bit of a brake on this stuff, assuming the regulator is asking proper questions and making the proper inquiries," he said.  

From optional to mandatory?

All app or dongle discount programs from insurance companies in Canada are optional.

However Gogolek has concerns one day they might not be. As use of the technology becomes increasingly common, Gogolek said insurance companies may begin to change their pricing policies to make monitoring part of the regular base rate. 

"And if you don't want to do that, well, we're going to charge the rate of a teenage boy driving a new Corvette," he said.

"That's where things will start to get very, very interesting." 

Reluctant consumers

For the moment, consumers may be reluctant to embrace the technology, said Bruce Cran, president of the the Consumers' Association of Canada. 

"People with bad habits who want to speed or do all sorts of other little nasty things, I don't think they would be the type to volunteer for a program," Cran said.

In some similar test programs he has seen, consumers chose not to opt in. 

"The theory is good, but the practice that I've seen has been very negative one way or the other," he said. "That's why I don't think it will work."