The sale of car insurance based on telematics, including ‘Pay How You Drive’ policies, has increased over 40% over the past year in Great Britain. These numbers have been published by the British Insurance Brokers’ Association (BIBA).
Particularly a lot of young English drivers choose for these modern policies. They can save over a thousand pounds per year, because the new insurances reward good driving behavior. In December 2014 323.000 of the ‘new’ policies had been sold. Currently this number has grown to 455.000.
Telematics insurance uses real-time data to monitor an insured’s driving behavior and calculates the premium accordingly. This requires a box with software and sensors to be installed in a person’s vehicle and of course, software to process the data. The sensor technology registers location, speed, acceleration and the G-forces that impact the car when swerving or turning corners. This provides the insurance company with insights such as braking and accelerating behavior of the insured and the actual and average driving speeds.
There are several Dutch insurance companies that deploy this technology at present and they award points for good behavior. Bad behavior gets points deducted. After a year, the insurer adjusts the monthly premium based on the number of points the insured has scored. With telematics, a driver can show his or her insurance company their good driving skills and get rewarded for that quickly.
FRISS Consultant Wouter Joosse is optimistic: “It is a faster, more transparent and verifiable system – and more fitting to our times – than giving discount for claim-free years. I can see this developing into a system where the insurer adjusts premiums monthly on the basis of points scored and/or distance travelled.”
Current terms and conditions of insurance policies state that data is only used to calculate the premium. Joosse elaborates: “Honest people will not be worried by the fact their location and routes are registered, as this is already possible with the mobile phones we carry. But insurers should check how long the data is stored. And if they don’t want their movements logged, then they can have the box removed. This will of course affect their premium as the whole idea behind telematics is that rates are based on actual behavior.”
It also enables reconstruction of vehicle positions and trajectories in accidents, making it a lot easier to verify claims. And data is more reliable than witness accounts.
Sources: British Insurance Brokers’ Association (BIBA) and am:web.