Key Benefits of Telematics
Significant reduction in premium Improved ability to assess risk
for good risks Improvement in profitability:
Less cross-subsidy for poorer Improved Loss Ratio
drivers Increased persistency
Feedback and recommendations Better Customer segmentation
for improving driving and targeting
Empowerment – more control Self-selection by customers
over premium further compounds risk benefits
Social benefits Avoid adverse selection
Opportunity for ancillary benefits
You have to get the customer proposition right – sharing the benefits
Motor insurers have historically used risk proxy factors for assessing
and pricing risk
Risk Proxy Factors Genuine, Fundamental Risk Drivers
Age At what time of the day is the vehicle
Gender When? used?
Where? What type of road is the car driven on?
Use (personal, business, etc) ?
Credit How is the vehicle driven – how fast
Vehicle type and how safely?
How How many miles does the vehicle
To date, these approximations have been good enough but technological advancements
mean access to fundamental risk data is now achievable
Deriving risk factors from the data,
and applying loadings / discounts
to customers to enhance selection
Customer feedback on behaviours
Reducing Vehicle usage overall,
and especially higher risk miles
Informing the claims process
Use of telematic data as evidence
Reducing underwriting and claims