Telematics are devices that work to track driving habits. How fast you drive, how abruptly you brake, and how much you drive can all be tracked through telematics, to narrow down on your best premium rate. There are many companies today working with telematics, which can revolutionize the process of claims management.
Introducing Telematics: The Best Way to Analyze Driving
With telematics, a device is plugged into your car’s onboard diagnostic port. The device is going to record driving factors and then send it to your insurance company. In the past, a more rudimentary form of telematics used smartphone devices. Smartphone apps would track how fast drivers were going and how far drivers went. But smartphone devices weren’t exact and could return incorrect information. Telematics is far more effective.
Telematics isn’t just for the insurance company. It’s for the driver, too. Drivers are able to prove that they are safe drivers, and are able to collect evidence if they do get into an accident. When it comes to safe drivers, more data is always better.
Who is Using Telematics?
Most major players in the insurance industry are now using telematics. Progressive, Travelers, Safeco, and Nationwide are all examples of large insurance companies using a telematics system. They’re using telematics to:
- Price their insurance policies. Telematics can see how drivers perform when braking, cornering and completing other maneuvers. Telematics can also see how fast drivers drive, including in conditions that could be considered adverse, such as heavy rain. This enables them to price insurance policies more accurately. For safe drivers, they can get much better rates.
- Find out more about how their drivers drive. Telematics can be used for data-mining information about how far drivers drive, what areas they drive in, and where they usually drive. If drivers drive primarily on back roads or highways, this could matter when determining their risk.
- Manage claims. Telematics can also be used to reveal information about claims, as the telematics devices are still available when claims might occur. For instance, telematics may be able to prove that a driver wasn’t speeding when they get into an accident, and that could prove that the accident was someone else’s liability.
Telematics is poised to revolutionize the insurance industry because of this. Now, the technology is just becoming easy enough and affordable enough that it can become commonplace, and it’s accurate enough that its data can be mined for complex insurance algorithms.
What are the Benefits of Telematics?
Self-reported driving data is rarely accurate. Telematics is good for both the insurance companies and the insured individuals. Through telematics, companies are able to drill down to real driving habits for each driver and deliver them premiums based on their true risk factors.
In the past, insurance companies needed to go by demographics. And that meant that people who were traditionally thought of as being unsafe drivers might find themselves with unfairly high premiums. Consider the fact that people are most likely to have accidents when they are in their teens or early twenties. But that doesn’t mean that every driver between the ages of 16 and 22 are dangerous. Rather than penalizing drivers for their age, insurance companies can instead see how safely they really drive, and price their premiums based on that.
Insurance technology is getting better. Through services such as telematics, insurance companies can save money—and, in turn, individuals can save money, too. Contact Great Lakes Insurance today to find out more.