Telematics is Changing the Underwriting Industry

Vehicle telematics, often referred to as a “black box”, track vehicle location, movement, speed and general performance. These devices record and also actively transmit data to management reporting tools and business applications. Engine management systems also often contain stored data accessible by telematics devices; fuel consumption and “greener” driving data being an area of particular attention for fleet operators.

The insurance industry is particularly interested in the application of telematics to driver behavior and the availability of data for, firstly, analysis of risk by underwriters assessing premiums and, secondly, analysis of accident related data when resolving claims.

These days, “usage-based” insurance, supported by telematically obtained data, is an established concept in motor insurance for commercial and personal risks, the latter particularly for young driver insurance where “pay as you go” costs can be adjusted to match driving behavior. For underwriters, this provides considerable flexibility and control when setting premiums for a high risk category of drivers, and those drivers can access their own driving record, via an app or on-line, with incentives to improve their behavior and earn reduced premiums.

Access to telematic information is of keen interest to insurers and lawyers responding to accident claims and suspected fraudulent claims. The “black box” data will, of course, be contemporaneous with the accident and its immediately preceding moments. As such, it should assist in determining liability by means of expert interpretation of the recorded location, speed and vehicle movements.

The legal costs associated with many contested cases could be avoided by early disclosure of telematic data, and further operational savings in time and expense would be made as well. The Courts are wary, however, some permitting such evidence and others not, but where it has been allowed, telematic data has proved influential and it is likely just a matter of time before it is regularly put in evidence, provided it is available and relevant to the issues.

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