Telematics is relatively new to the insurance industry, and it can help drivers young and old cut the cost of their premiums by proving they are good drivers. But how does it work? And where else is the technology used?
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Life is getting better through telematics, the integrated use of telecommunications and informatics. It enables us to transmit and receive information in different locations through specific devices. And recently, more people are opting to use it to get lower rates on their auto insurance. Here’s how.
Living Better through Telematics
Though you may not have known it, you probably have already used telematics in one or more of the following ways:
● Satellite Navigation
● Sports Tracking
● Google Maps
● Mobile TV
Telematics Behind the Wheel
Telematics are increasingly being used in the auto insurance industry as black boxes fitted into vehicles to record drivers’ behaviour.
>> The theory: With a black box monitoring driving behaviour, the better you drive, the cheaper your insurance premiums will be.
Vehicle telematics devices typically record:
● Time of day a car is driven
● Distance a car is driven
● Speed at which a car is driven
In some cases, black boxes also monitor:
● Aggressive acceleration or deceleration
● Collision details (location, force of impact, etc.)
● Circumstances related to theft
Black-Box Use Skyrockets
According to the British Insurance Brokers’ Association, the use of telematics “black boxes” in vehicles has increased by 1,500 percent over the last three years.
Live Insurance Policies Using Black Box Telematics, by Year
2009 12,000 live policies
*First 6 months of 2012
Several key factors have encouraged the use of black-box telematics in vehicles. Experts predict that the forthcoming directive barring gender-specific premiums will cause another spike in usage, as more women will seek out less-expensive policies.
Factors Driving the Growth of Insurance Telematics
1 Rising cost of premiums for young drivers
2 Falling cost of technology
3 Greater product availability from insurers
Deep Discounts for Drivers
Young people with high premium costs are hoping to benefit from using telematics in their vehicles. The average discount is enough for many to install a device.
How much of a discount would respondents require to install a telematics device to monitor their driving experience?
More than 20% 47%
>> 25% to 33% average policy savings per driver.
>> Some young drivers saved more than £1,000 in premiums.
Main U.K. Providers in 2012
According to BIBA, the number of providers of black-box devices and behavior-monitored policies is expected to rise. However, there are already many providers for drivers to use, such as:
● Insure the Box
● Fair Pay
SOURCES: BRITISH INSURANCE BROKERS’ ASSOCIATION, DELOITTE, INSURANCEAGE.CO.UK, TELEGRAPH.CO.UK
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