Can Automotive Insurers Benefit from Telematics?

Insurance CIO Outlook | Wednesday, June 08, 2022

Telematics enables automotive insurance firms to streamline their policies and make data-driven decisions.  

FREMONT, CA: The insurance industry is increasingly leveraging data and analytics solutions across its functional modules. The trend is no different when it comes to automotive insurance. Typically, automotive insurers collect and process a wide range of user data for various insurance aspects such as policy administration, underwriting, claims processing and management, and risk management purposes. Earlier, car insurance companies had only certain user-based variables such as driver’s age, marital status, years of driving experience, and the ZIP code where she or he lived. However, insurance firms can currently use telematics to analyze driver profiles more granularly, eventually correlating a driver’s propensity with the credit scores.

Telematics collects and analyzes data from trucks, cars, and other vehicles. Telematics in auto-insurance utilizes artificial intelligence (AI) and machine learning (ML) to collect and analyze data pertaining to the driving behavior and then create a risk profile based on the data obtained. Insurers can even have access to details such as gradualness of braking, average turning speed, vehicle speed, and acceleration. Such details can be fed to a series of AI-driven algorithm to determine the credit rating. Typically a safe driver gets a cheaper insurance rate.

Data privacy is another concern that is haunting the customers, irrespective of industry type. However, telematics in auto insurance comes as a respite for the car owners. The data that is utilized by telematics algorithms are largely anonymized, except for the claims information. Further, the data is more concerned with the driver’s behavior rather than his or her personal information. Moreover, insurance firms can share the data with the drivers and help them to engage in safe driving practices. In this way, insurers can offer affordable plans to their customers.

Increasingly, automotive insurers are utilizing telematics to streamline their policies and offer improved services to the customers. 

See Also :- Top Automotive Technology Companies


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