Have you ever considered the streams of data we all leave behind us every day? Everything from information on our lifestyles, daily routines, preferences and the way we drive is logged daily through our use of smartphones and social media.
It’s no surprise then that the insurance industry is increasingly harnessing this data (otherwise know as Telematics) to provide more accurate information in order to make better educated decisions on risk selection. Is it being used to help us or catch us out though?
Telematics is particularly prevalent within motor insurance and whilst once limited to fleet use it is now playing a growing part in standard motor insurance which may be a little scary to some of us.
There are many reasons as to why insurers would look to utilise telematics. Firstly to reduce premiums through the monitoring of gathered data on driving behaviour. BIBA has reported that through the use of telematics safer drivers can reduce premiums by up to 25%. Great news for some of us.
There’s bad news for others though. Insurers are also able to gather up to date information on speed of acceleration, hardness of braking and cornering, which in turn will give an insight into driving behaviour and a more accurate method of pricing policies. This will go some way to eliminating unfair pricing for those who are deemed to fall into ‘at risk’ demographics, as until the utilisation of telematics many premiums were priced on certain demographics including age and occupation and the type of vehicle insured. Now and in the future, driving styles are determining premium rates (and increases) rather than the average driver which should result in lower premiums for safer and more sensible drivers and urge those paying higher premiums to be more aware of their driving habits.
Should you be involved in an accident, telematics can now allow insurers to use GPS data gathered to ascertain the location of a claimant’s vehicle at the time of an incident and in addition….one of the most surprising parts…..is that unstructured data from social media can also be used to establish whether the claimant has any connections with the other party(s) involved. A correlation between friends and accident rates/reduced social media function is probably not expected by any of us.
And telematics goes further still. This data can be used as a tool to investigate possible incidents of fraud from such activities as ‘crash for cash’ schemes. Insurers can take data prior to an accident to determine driving behaviour leading up to the event and can streamline the claims process as they will be notified immediately after an incident.
For insurers and the insured alike, the success of telematics within motor insurance in particular is paving the way for the utilisation of this technology into other areas of business. One such space embracing telematics is the construction and engineering field. Already used in supply chain, improving safety and monitoring carbon emissions, telematics has an important part to play in this area and is constantly evolving to become more effective and efficient. One things for sure, the use of telematics is likely to affect all of us in one way or another. I wonder where else we will see telematics used in the future?
I’d love to hear your thoughts and comments on this topic.