Top 4 benefits of telematics for the auto insurance industry
2019-06-18 16:20 Tuesday
Nowadays, technology is changing the way that providers offer insurance across the industry, but how can telematics in particular offer new opportunities and efficiencies into bringing auto services to drivers and fleet management professionals?
Let’s take a look at some of the key reasons why so many people are lauding the changes telematics can bring – through innovations such as usage-based insurance (UBI), Big Data, connected vehicles and claims management – and hailing it as a harbinger of a new era.
Insurers – be they focused on fleets or the consumer market – are entering a period of rapid transformation and disruption. Telematics is one of the technologies driving change.
Telematics is the bringing together of information and communication in devices, including smart phones, that transmit information about how a vehicle is being used and even what is going on in the environment around the vehicle.
While auto insurers were initially reluctant about using telematics to learn more about the driver’s they are insuring this situation is quickly beginning to change. These four key reasons are why auto insurers should take a closer look at telematics.
1. Telematics insurance will attract safer drivers
For those customers with a clean driving record and a good pattern of safe driving, young and old, having their premiums judged by their actual minute-by-minute record will be appealing, because they know they should be charged less compared to their high-risk counterparts.
Building up a customer base of safe, diligent drivers will ultimately increase profits because there will be fewer claims and fewer payouts. This will cut down on claims management costs. As technology becomes more precise and more comprehensive, good driving will be even further encouraged.
2. Telematics will improve the bottom line
Insurers operate on wafer thin margins and so anything that can improve the accuracy of policies and underwriting is a valuable tool. Telematics enables auto insurers to move from policies based on static information to ones based on dynamic information that change in real-time.
Instead of writing policies based on age or gender, the additional data generated about a policy holder’s actual driving patterns or characteristics to build a policy that more accurately reflects the risk profile of each person.
3. Telematics insurance will reduce fraud
Fraud is an unwelcome reality in the insurance industry, but telematics will help auto insurers mitigate loss. One of the most promising applications is to address medical fraud.
In-vehicle devices, connected to advanced driver assistance systems, can easily report on the force of a crash, which, in turn, can verify or refute a medical injury claim. Moreover, devices can also log data about rainy conditions, aggressive driving, breaking force, and other information that is key to understanding an accident.
The resultant data can be invaluable in apportioning responsibility, and mitigating future risk exposure.
4. Telematics will lead to better customer relationships
None of us look forward all that much to interacting with our insurance company. Neither policy renewals nor managing a claims process brings much joy, but telematics will help insurers change that situation.
While this extra connectivity might still be off-putting for a high-risk driver, it opens up the possibility for the insurer to become an advisor for a customer on how to improve, or which safety features should be used to improve their risk profile.
But the real consumer-focused benefits become clear in the immediate aftermath of a crash or accident. Through telematics, an insurer can be informed of a collision in near-real time.
Instead of the customer calling the insurer, the insurer could call the customer immediately and assess what they need, dispatch an engineer, call an emergency contact, gather visual proof from the scene, and open a claim and get it underway before the person has left the roadside.
But these four reasons are just the beginning of the benefits that telematics will bring to auto insurers. And this is just the beginning of the conversation about the data-driven future of the insurance industry. Many are looking forward to a quickening pace of innovation and seeing what comes next.