Is telematics and the future of motor insurance?

Telematics technology is dramatically changing the auto insurance industry by enabling new product offerings, improving underwriting and offering incentive for driver safety.

Telematics are currently used for pricing insurance in a way that it rewards drivers for safe driving.

Peter Diskin, National Business Development Manager of the General Insurance division at Gallagher Bassett believes telematics could allow drivers be charged for insurance on a usage basis in the not so distant future.

“The benefits of a telematics-based insurance policy to the driver include reduced premiums for lower kilometers as well as cost savings for driving at safer times. Black boxes and the data they provide allow insurance companies to administer an incentive or reward for safe driving practices.”

Mr Diskin believes that in addition to a transformation of the insurance industry, telematics hold a great deal of scope for other functions such as emergencies and are a great way for brokers to become an integral part of customised solutions for clients. He says, “In 2017 the role of an insurance broker is about so much more than helping a client buy the right insurance products – it is about employing a whole range of strategies to help clients manage and mitigate their risks. Within that context brokers play a vital role in helping clients understand the costs/benefits of telematics as strategies to manage their motor risks and liabilities.”

“Brokers advising on motor fleet will need to be at the forefront of understanding this emerging technology. As a third party claims administrator, at Gallagher Bassett we’re very mindful of the implications of telematics on motor claim, from the liability through to the availability of data about the claim, and we’re working closely with our broker clients to ensure our offerings continue to meet the evolving needs of the market.”

Insurance companies are increasingly using telematics as a method of fraud prevention. So the insurance company know if accidents happen the way they have been claimed to have happened.

If a consumer opts for a telematics car insurance policy, a black box device is fitted into the car to capture and transmit the data to the insurer and the driver/policy holder. Other options such as mobile aps and plug-ins are also available.

Black boxes capture a lot of data. Not only can they provide accurate, continuous vehicle speed and location data but also straight line acceleration, angular acceleration and deceleration data. This enables a far more complete understanding of vehicle usage which can provide many benefits; not only to the vehicle owner but also to other road users. In turn, this helps lower driver scores and insurance premiums = everyone wins!