Insurance telematics policies give consumers access to reduced premiums by entering into a contractual agreement to share their driving data with an insurer, which is then used to calculate the likelihood of that policyholder making a claim.
What is insurance telematics?
Insurance telematics has become hugely popular over recent years. Young drivers and over 65s are faced with the highest premiums of any age group; and with new changes to the Ogden discount rate, the additional costs that will be incurred by insurers will soon be passed onto consumers in the form of rising premiums for all ages.
How is the data collected?
Every modern vehicle has a component called an on-board diagnostic port, or OBD port, which have been mandatory in all petrol vehicles sold within the European Union since 2001, and diesel vehicles since 2003. Through the OBD port, information from the vehicle can be retrieved. For example, when a vehicle experiences a mechanical issue and is taken in for repair, a machine is often plugged into the OBD port to retrieve fault codes which help mechanics diagnose and fix the issue. The OBD port also allows a telematics device, or ‘black box’ as they are often referred, to be plugged in. This box can then transmit data in real-time to an insurer.
What data can the hardware collect?
Trakm8’s insurance telematics hardware can pull a multitude of data from the vehicle, which is used by insurers for a variety of reasons. This data is then transmitted across a mobile network to secure servers.
• Firstly, and most importantly is driver behaviour data. Through inbuilt GPS receivers and accelerometers, the telematics device is able to monitor how the vehicle is driven and is able to log incidents such as speeding, harsh cornering, heavy acceleration and braking. These readings are then used to create a risk profile for each driver through a score out of 100. High risk drivers can then be contacted by the insurer in order to warn them that they may be in breach of their insurance policy and can go as far as cancelling policies for drivers who persistently breach their agreement. In contrast, drivers who demonstrate safe driving throughout the duration of their policy can be rewarded with reduced premiums when it comes to renewal.
• The inbuilt accelerometer within a telematics device is also able to detect impacts to the vehicle. Movements within the accelerometer also give insurers more insight into a collision, such as the severity of the impact or the direction in which the impact came from. GPS data also provides them with the location, date and time of an incident. For insurers, this information automates the First Notification of Loss (FNOL) process in real-time, removing the need for the driver notify their insurer that an accident has occurred. Insurers can also provide information to emergency services in instances where they have reason to believe the policyholder could require medical attention. Additional data that can be collected through the FNOL process consists of: policy details, weather and road conditions, speed limits, and historical driver behaviour data.
• More insurers are beginning to use telematics devices to provide value added services to their policyholders. Due to remote the vehicle diagnostics capabilities of the black box, policyholders can now identify battery health issues and underlying maintenance which are likely to cause them to break down. Policyholders can also benefit from service and MOT reminders, a means of accurately logging business mileage and a means of finding their vehicle, in a busy car park for example.
All of Trakm8’s insurance telematics hardware is manufactured and dispatched on behalf of insurers at our electronics and distribution plant in the West Midlands. We also able provide a round-the-clock customer and technical support service to guide policyholders through the installation process and resolve any queries surrounding their telematics device.
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