Telematics and Car Insurance
The Next Logical Step For Saving?
Two of my favourite non car insurance blogs to research during my time with Chill Insurance has had to do with big data and technology. I am a marketers dream thanks to all the data they could glean from my constant checking in and online activity.
I use my phone to check in everywhere I go. Failing that I Instagram my food, I have some swarm badges and I know the gradient of most of the hills around my house. All this is thanks to my symbiotic relationship with my smartphone. If you ever want to know where I am, or what I'm doing, all you would need to do is check out my online activity. Staying off grid is something I can't imagine doing, but could my predisposition for recording my daily activities actually benefit my wallet?
Everything we have in our lives is becoming more and more connected. We can now monitor our fridges, TV, smoke alarms and water monitoring from our smartphone or tablet. From an insurance perspective the development in the inter-connectivity of the everyday items we regularly use has the potential to be revolutionary.
The capacity to get more accurate information about the activity of policy holders could potentially lead to reduced pricing and changes in how claims are assessed. So if there was a way for you to save on your car insurance by using a smart phone, or other linked device, then why wouldn’t we all be trying it out? This is why the idea of telematics appeals to me.
What Is Telematics?
Telematics refers to the sharing of information via a wireless network. Taking its name from the science of telecommunications and informatics, it has been utilised in various ways for a number of years. The system allows the end user to collect data about vehicles being monitored. This data can then be analysed to help build a better understanding of the vehicle or device being monitored. This data can give insurers a better picture of the driver they are covering.
Telematics and Car Insurance
Imagine telematics as a big data no claims bonus. All the drivers driving patterns, accidents and driving history available for insurers to review in greater detail. Insurance is based on statistics and assumptions. Insurers will calculate premiums based on risks and provide the insured with their quote. These statistical risks means that those seeking car insurance are getting a quote based on the general population rather than the individual themselves.
Telematics recording, via a black box or app, can allow an insurer to track the individual driving patterns of one person thus allowing them to make better assumption of the risk associated with that one driver. All this information gathered by the insurer could potentially allow a driver to get a reduced premium.
What Does Telematics Track?
People who have signed up to telematics based insurance cover usually have some of the following recorded by their insurer.
- Distance traveled.
- Acceleration patterns.
- Average speed.
- Cornering patterns.
- Braking patterns.
- Average time spent driving.
How Are You Monitored?
There is no standard system that is applied by all insurers but the general system employed by some insurers is as follows.
- The driver downloads an app or installs a black box in their vehicle.
- The driver operates as normal over a specified period.
- The driver and the insurer review the data collected. This information may then be used to potentially help provide a different quote.
Additional Uses of Telematics
There are some additional benefits for those who decide to investigate availing of some form of telematics based insurance apart from potentially reducing the cost of their car insurance premium. These benefits include:
- More accurate breakdown location information.
- Better tracking of vehicle, dependent on the system installed, in case it is stolen.
- Learning tool for improving the driving skills of the driver.
It is estimated that 107 million drivers will choose to have their driving habits tracked via this method by 2018. This figure is amazing when you consider that there were only 5.5 million telematics subscribers in 2013.
If these figures provided by ABI research are to be believed then it would appear that it is less of a case of when, and not if, telematics become the norm for car owners. This doesn’t mean that the established cover types (comprehensive, third party, third party fire and theft) will become redundant. The movement towards using data collected, to provide a quote, is something that needs to be regulated further by the various governing bodies. Issues such as data protection and sharing of the information collected also need to be researched further by insurers and brokers alike.
The application of telematics is an area that those looking for savings on their car insurance should keep up with so make sure you follow our award winning blog, Facebook and Twitter pages for all the latest car insurance news.