The auto insurance industry has always been a stronghold for data collection and management. Due to the ever-increasing sophistication of in-vehicle electronics, and the widespread availability of wireless connectivity, the auto insurance industry faces a significant transformational challenge.
The incorporation of digital technology in cars has allowed for the development and implementation of sophisticated electronic management and control systems. The rapid development of satellite-based navigation technology has allowed for the successful implementation of telematics systems. Vehicle telematics now has the ability to provide detailed driving data with exact time and location and transmit it to remote locations.
A new era has begun in automobile insurance thanks to telematics-supported usage based insurance (UBI). The automobile telematics, integrated navigation and computer and mobile communications technology monitor the driving habits of consumers directly. It allows insurers use real risk factors to accurately assess the risks and create appropriate UBI rating plans.
Telematics-based insurance programs are becoming more popular due to consumers’ increasing interest in car connectivity. Telematics data can be used to calculate precise rates, improve risk management techniques, and minimize losses through better claims assessment.
Telematics programs for insurers are growing beyond premium discounts due to rapid technological advancements. They include value-added services in order to increase consumer loyalty and competitiveness.
Telematics is often interpreted as insurance that is usage-based. Telematics is much more. As they seek to be competitive, insurance companies are now looking at telematics for loss control, claims adjustment, fleet management, and many other areas.
Apart from this, more carriers are using telematics for servicing and book management. Today, more insurance companies are using telematics to offer additional services. These services include trip support, roadside assistance, evaluation of your needs and other concierge-type services. This is a major shift in traditional insurance that tries to distinguish and appreciate “safe” drivers.
Both consumers and insurers are key drivers of the growth in telematics-based UBI. Consumers will see improvements in safety and experience, as well as lower premiums and better pricing. Insurers will enjoy the many benefits of telematics-based UBI, including improved brand recognition, loyalty, and reduced claim costs. Telematics systems are a useful tool that can help in developing a competitive market for insurance carriers. They also provide a platform to assist consumers and society overall.
Insurers are focusing on the ability to collect, store and analyze variable data in order to solve complex problems and remain viable and profitable. With telematics-based UBI poised for potential change in the insurance industry, auto insurance is quickly becoming a big data business.
These cars can park themselves, avoid traffic and find the closest gas station when they run low. The next big disruptor in the auto industry lies behind these connected fuel cells and connected cars. It will soon be the norm for cars that are autonomous.
These innovations have real implications for insurers. They are changing the landscape of auto insurance and posing real challenges. Insurers need to rethink policies, claims processing and overall business models. Only those who adapt to the changing automotive industry will be able to secure their position. An insurance company that is dynamic must be able to understand the new types of data available. These will help them stay operational in an era where social norms and ground-breaking technology are emerging.
Already, telematics has made a significant impact on the industry. It is possible that policyholders who are open to telematics will increase as technology becomes more acceptable.
Telematics’ basic purpose is to assess risk at an individual level. In addition to traditional factors like age, gender, and experience, telematics also includes actual driving mileage. Telematics can now be used to calculate actual driving behavior, by analysing hard breaking and swerving. An insurer can determine how a car drives and the conditions, including weather, traffic and time of day.
