Telematics is a form of vehicle software that combines the features of telecommunications and informatics. This software connects to telematics devices installed in vehicles, including GPS technology, sensors, mobile applications, dashcams and vehicle engine diagnostics solutions. A variety of data can be obtained using telematics, including vehicle speeds, vehicle locations, braking intensity and acceleration frequency. This data is then translated into auto insurance rates that are effectually built from a driver’s behavior.
Drivers are often unclear on how their safety records impact insurance pricing. They may know premiums increase after an accident or speeding ticket, but they don’t see the correlation between insurance premiums and how they drive. Telematics technology provides immediate feedback and shows how driving behavior affects rates. In fact, a Willis Towers Watson study indicated that crash rates fell as much as 80% in commercial fleets that were monitored via telematics.
Several insurance companies already use telematics to determine auto insurance premiums, and many other insurers believe telematics is the future of calculating auto insurance premiums. It’s estimated that the insurance telematics market will grow at a compound annual growth rate of 18.5% over the forecast period (2021-2026). Put simply, not only does telematics encourage safe driving, but it also offers a more accurate method of calculating insurance premiums.
Telematics is reshaping the auto insurance industry, using driving behavior instead of demographics to calculate auto insurance premiums. Telematics may eventually eliminate the use of credit scores too, and insurers may base prices solely on behavioral driving data. This behavioral focus is particularly impacting commercial fleet programs where owners are already seeing reduced premiums. For additional insurance and loss control guidance, contact Bassler & Co. Insurance by calling (847) 480-0800 or by visiting our website http://www.basslerins.com/.