All business organizations rely heavily on data and the insurance sector is no exception. And with the advent of telematics, car insurance is bound to witness revolutionary changes in the coming future. Here is how telematics will change the landscape of car insurance.
Insurance companies are gradually moving from the “one size fits all” approach to a more personal and individual-oriented way of tackling customer needs. Personalization of services is the need of the hour and business organizations are well-aware of it. For instance, the car insurance available on Finserv MARKETS provides a whole lot of flexibility to customers. Customers can avail round-the-clock assistance, cashless facilities from a 4000+ garage network and flexible EMI payment options.
Telematics is still a relatively untapped area in the Indian market, but the technology has been in existence for almost two decades now in Europe and the US. Telematics is simply monitoring any asset through a GPS system. In vehicle telematics, data such as speed, movements, braking, distance travelled, etc. are collected and analyzed to help insurance companies tailor the policies as per the individual’s requirements.
People often debate whether the car insurance premiums should be uniform even though each driver’s skill and on-road behavior is different. Why should a customer who takes utmost care while behind the wheels pay the same amount of premium rash, accident-prone drivers do? Here is where telematics insurance changes the picture completely. With data collected, finance companies are able to analyze your insurance risk and calculate your car insurance premium renewal amount accordingly. A lot of telematics insurance companies employ a point system where safe drivers are given good scores eventually resulting in a lower car insurance premium. Likewise, those who play it rough will probably end up paying more from their pockets apart from putting theirs and other commuter’s life at risk in the first place. The telematics system, or often called the black box, is very popular among drivers in Britain.
According to 2016 report by The Telegraph, nearly half a million drivers in Britain opted for telematics insurance. Experts believe, this user-based insurance also called PAY HOW YOU DRIVE, will be a norm in the future with the number of users expected to touch 100 million in the US and Europe alone by this year-end. The Globally, Allied Market research says this area is expected to witness a growth rate of 36.4 percent from 2016 to 2022.
Safety is another area telematics will play a major role in. With the real-time data tech companies collect they better analyze any potential risk. For instance, if a driver exceeds the speed limit in a restricted area, an alert or warning could be sent on their device. Offenders, as mentioned earlier, can have their points deducted and eventually pay the penalty by paying higher car insurance premiums. Companies have found that this data-driven approach has increased the number of customers and boosted customer retention and loyalty. According to a LexisNexis telematic insurance study, 36 percent of users are willing to take up car insurance if they are provided user based insurance discounting which employs telematics.
A 2016 Forbes write up by the research and consultant firm Frost and Sullivan, says millennials are the biggest market for user-based insurance, thanks to smartphones. There are several apps which let you try out before opting for a plan. Provided data-privacy is ensured, telematics as evident will change the dynamics of car insurance for sure.
But even as the paradigm of the car insurance industry changes, its utmost necessity remains the same. Before setting off on your adventures, ensure that you have taken out a comprehensive insurance policy. You can consider the car insurance policy available on Finserv MARKETS. With more than 100 million customers, you can rest assured that you and your car are in safe hands.
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