Why Telematics may be a Major Disruptor in Insurance?

Why Telematics may be a Major Disruptor in Insurance?

The vehicle telematics system and User-Based Insurance (UBI) are key trends within the auto insurance industry and expect a disruptive change within the near future.

Digital technology is transforming the insurance marketplace enormously and therefore the insurers are investing significant attention to satisfy the customer expectations by adopting vehicle telematics system. 

The customer vehicle integrated with the telematics system helps to calculate insurance premiums which depends on the space covered by the vehicle, the speed the driving force maintains while driving, and also the general driving habits of consumers as this information are often read and stored by the telematics app and made accessible to not only the insurers but also all stakeholders.

Vehicle telematics is recalibrating the auto insurance industry expectations and opening new ways to succeed in bent the clients. the increase of auto telematics not only changing the policyholders' demands, but also disrupting the way it should be supplied. Many insurers are offering more personalized insurance policies to every and each individual.

Telematics as a serious disruptor

The digitization process that telematics has brought in recently has made the entire insurance industry to face up and notice and eventually catch-up with this alteration . Recent research studies have revealed that vehicle telematics is playing a prominent role to disrupt the auto insurance industry for positive business outcomes. during this way, Big Data is playing an important role in helping insurers to unravel various challenges like data processing , handling, warehouse data, building data path for user applications and among many others by adopting extensive and varied arrangement , which are made easily accessible to vehicle telematics system with the influence of cloud computing. 

The access control of the vehicle, real-time updates of traffic jam and weather forecasts and lots of other vehicle telematics options are remotely accessed with the assistance of cloud computing, for both customers and insurers. the large data and cloud computing technologies are the mainstream of auto telematics system and hence are attracting new customers towards insurance policies by providing convenience and luxury in commission .

Over the years, the auto insurance companies have successfully reduced the gap between insurers and customers. 

The vehicle telematics-enabled usage-based insurance is gaining momentum to satisfy the customer satisfaction with a versatile pricing model over the normal pricing model and as a result policyholders pays the insurance rates supported their driving behavior. it's an ultimate transformation that's giving customers complete control over their insurance premiums. to assist policyholders for his or her driving risks, User-Based Insurance (UBI) model encourages individuals to drive safe and lower the danger of accidents happening through live feedback whilst they will economize by improving their driving skills.

In the US, Insurance companies are implementing different approaches in User-Based Insurance model and therefore the simplest, auto insurance policies are trending within the auto insurance market, like Pay As You Drive (PAYD) is one of them. instead of paying a hard and fast annual premium charge, PAYD ensures premiums are calculated supported the amount of miles/kilometers driven by the policyholder with the assistance of auto telematics system.

United States is considering the UBI model as their grid. The spate of recent successes has confirmed immense response of policyholders towards this new approach. Even in many European countries, insurers moved to subsequent level of Pay-How-You-Drive (PHYD) right after the large success of Pay-As-You-Drive (PAYD) model.

The Pay How You Drive (PHYD) monitors the driving force behavior and driving style, the premium charges are reduced accordingly with improvements in driver behavior.The UBI features a great potential gateway to digitally enhance customers, as a result, PHYD has created an interesting platform for auto insurance policies, but variety of insurers have started looking beyond the Pay How You Drive (PHYD)model for better user experience, as a development Manage How You Drive (MHYD) considered because the next move of UBI. Manage How You Drive (MHYD) offers a reduction to safe drivers and also intimates the policyholders about driving performance through monthly feedback counting on their driving score.

Vehicle telematics benefits:
  • Experienced drivers often pay unreasonably high premium charges which may be reduced easily.
  • Encourages policyholders to drive safely and reduce the danger of accidents.
  • If the policyholder drives fairly often then he/she will get fewer premium charges.
  • Continuous monitoring of the driving force helps to enhance the driving behavior.
  • it's extremely easy to trace vehicle health and fuel consumption of the vehicle.

The vehicle telematics system and User-Based Insurance system is imparting a serious disruptive change within the auto insurance industry with innovative policy models for customer convenience. 

However, insurers are implementing different strategies to enhance the marketing and sales process of UBI model to take care of the balance in insurance policies, perhaps the priority is additionally given to the danger management and price calculation from the customers' stand point. 

The disruptive vehicle telematics system can trigger the method of auto insurance policies and may be sustained with none major change within the insurance firm structure, business model, and strategy. The vehicle telematics system is understood for its conservative posture and disruption isn't very easy for such systems, especially within the auto insurance industry. 

But the year 2016 are often a year of continuous transformation of auto telematics system, during which the insurance companies who remain as innovators are going to be those that are willing to interact in significant rethinking.

Prime's telematics system, Xemplar, enables fast and efficient two-way communication between insurers and customers. Xemplar's mobile app-based system saves you money on hardware and infrastructure costs while also accommodating any mobile device or tablet, reaching drivers anytime and anywhere, and providing your business with critical information in real-time. Contact us now, and in but 24 hours you'll have the simplest technology solution for auto insurers.