Telematics and Usage Based Insurance

The motor vehicle market is changing rapidly along with  the insurance market. Over the last few years, insurers have begun to incorporate telematics via Usage-Based Insurance (UBI) programs. New opportunities with telematics in claims and underwriting  present compelling use cases for both insurers and consumers.

Insurers can now innovate using insights from new data sources or risks identified in real time. Penetration rate of personal telematics insurance policies is estimated to increase to  10% in 2020. This represents an increase in the number of telematics insurance policies o nearly 90 million in 2020.

Actual driving data strongly influences the predictability of a consumer having an accident claim or not.  Telematics is an important factor in the determination of premium pricing. Beyond pricing behavior analysis and claims data can be used for predictive analytics and risk management. Data can be directly actionable for the benefit of both insurers and policyholders.

Using Telematics data to detect motor vehicle crashes and optimize resulting claims presents significant advantages for both insurers and policyholders.  While the insurance industry is  wishes the driver  drive  safe  through driver education, there is more value to telematics, especially in claims handling in determining the cause and faults in an accident. Telematics is transforming motor insurance with connected and autonomous cars.  Cars that drive themselves affect both the need for insurance and liability assignment.

Telematics data delivers significant value to insurers, including reducing the average cost of claims, and combating fraudulent claims, and improving data collection techniques. Telematics expedites the entire claims process, and  as an insurer  employs telematics for this purpose, it lowers the average claims cost.

Usually the policyholder controls the moment when a claims process starts.  They would be the party that triggered the claims process, but with telematics, the insurer’s claims process begins immediately when a  crash is detected, enabling more control, better customer service, as well as fraud and cost reduction.  Telematcis helps with a proactive First Notice of Loss (FNOL) service allowing the insurance company respond fast  to an accident, even moments after it has happened, Proactive contact can be made with the policyholder to collect as much information as possible and “freeze” the crash scene.  The goal is to minimize the risk of fraud or subsequent third-party intervention in the claim process .

Real time data  delivers detailed crash recordings, which includes:

●      Date/Time of impact

●      Speed and location

●      Vehicle journey at time of crash and g-force

●      Acceleration/deceleration parameters

●      Use of brake, signals

●      Weather

It can also provide additional  information to help roadside assistance and emergency services manage the event accordingly.

Telematics can gives insurers an accurate understanding of a crash even if only one of the vehicles is enabled with telematics.  Insurers and leverage this data to project the possible long term and short term physical impact to the driver and passengers of a vehicle.

Telematics insurance policies, on average has shown to  result in fewers claims compared to  non telematics policies.  Telematics data and proactive FNOL have the ability to improve the claims management process by several days.  Data analytics is critical to understanding of events that happened to determine liability.

Driver behavior analysis along with crash and claims data leverages the models of predictive analytics for risk management, personal engagement and underwriting, and benefits insurers to provide : Lowering claims frequency, Reducing claims costs, Improving customer value proposition and increasing loyalty and stronger retention strategies.

With telematics adjusters are equipped with the best insight to assign responsibility in a crash, process claims faster, and significantly minimize fraud. The use of telematics in crash and claims rapidly grows in fighting fraud and recognizing new channels of revenue for insurers.