Over the past decade, the auto insurance industry has hardly utilized telematics data to their advantage and also pass on further discounts to users. However with Autonautics it is going to undergo a massive change now.
Telematics data from Connected Fleet along with user-based insurance policies is having an enormous impact on the insurance industry when it comes to claims processing and ensuring driver safety. Insurers can now get access to data, which helps them increase their frequency of interaction and proximity with customers to offer extra services, improve profit margins via specialization, and understand customer behavior and risks.
How does it work?
Telematics collects data using onboard diagnostics devices, smartphone apps, smart tags, and other devices. These devices are equipped with an advanced GPS tracking system, motion sensors that provide information regarding impact on the vehicle (like in the case of accidents), a SIM card for transmitting data, and software that controls how the data is transmitted and analyzed.
Telematics data is used to measure different aspects of a customer’s driving – it is then sent to the insurer. The company can then determine how safely the customer drives and adjust their premium accordingly. Nowadays, they are developing programs where drivers who adhere to road rules and safety standards are given rewards. Once they decide to renew the policy, telematics is used to calculate new premiums after checking the individual data about the customer’s driving.
What are the benefits of telematics for the auto insurance industry?
Consumer demands regarding specialization and personalization are at an all time high. Telematics helps to develop user-based insurance (UBI) programs that match the present trend. Insurance companies use this data for assessing risk and calculating renewal premium costs. Insurers also take advantage of telematics when it comes to processing and managing claims.
Yet another area where telematics is set to play an integral role is claim triage, analytics, and loss control. In fact, few insurance companies have already invested in this technology to track down stolen vehicles, provide necessary assistance after accidents, and gain a clearer insight of accidents to recover money from the individual who is responsible for it.
It can provide contextual information regarding car accidents, which is important for the following reasons:
- It helps reconstruct what actually happened, so customers reporting a claim know all the details (even if they are unable to recall exact details after an accident, as is often the case).
- Telematics helps insurance companies understand how much of the claims process can be predicted and prevented.
To put it in a nutshell, telematics helps to bring down costs of vehicle insurance, while boosting road safety by increasing driver awareness.
How are insurance companies using telematics to their advantage?
Companies have developed UBI programs that utilize an OBDII device plugged into the onboard diagnostic port of the car to collect mileage information and driver behavior data. Based on the collated data, customers receive coaching and feedback about their driving. If they drive safely, they can earn sizeable discounts too.
Data collected using telematics can be extremely useful if you know what to do with it. Insurance telematics can offer companies a lasting competitive edge. Companies have devised a telematics solution to use data at various points of their value chain. For instance, when it comes to interactions with clients, they can boost the claims management process and offer users extra services with the help of collected data, such as quick roadside assistance. Here too, there is ample scope for recording trip scores and providing behavior-specific coaching.
Accidents caused by teens have been increasing at an alarming rate. That is why, insurance companies have offered teenage drivers and parents the opportunity to get email or text alerts for monitoring harsh braking or acceleration, speeding, unauthorized driving times, and unapproved driving locations (via geo-fencing). There is a teenage driver coaching functionality as well. Real-time information about driving habits is provided through a web portal. Drivers who participate get a discount on their premiums for a particular time period.
Apart from helping insurance companies come up with personalized offers and nurture customer relationships, telematics supports claim management and payment. Insurance carriers that execute a unique UBI strategy with the help of this technology can create powerful assets and gain competitive advantage using the data.