3rd February 2017
Telematics car insurance is becoming a family affair
In the most basic terms, ‘telematics’ is the name given to technology that uses telecommunications to send digital information to a distant piece of hardware for processing and analysis. Trak Global was founded on telematics back in 2009, with the vision of harnessing the technology to ease the insurance claims process.
With products and solutions initially focussed on the vehicle rental market, we launched Carrot Insurance in 2012 with the conviction that telematics would also play a significant role in keeping young and newly-qualified drivers safer out there on the road, with the added benefit of making the motor insurance experience much more rewarding for such customers.
Putting to one side for a moment the fact that telematics technology is also bringing wide-ranging benefits to many commercial vehicle fleets and other businesses, it has traditionally been associated primarily with young drivers or those with limited experience behind the wheel. Although the term ‘black box’ is typically banded around, the technical name for car insurance that rewards policyholders for driving more safely, smoothly and efficiently in exchange for some kind of reward is ‘usage-based insurance’, or UBI for short.
Continuing the unabated trend that kicked off around half a dozen years ago, black box, UBI or telematics policies, whatever you want to call them, are becoming increasingly commonplace – and no longer just for young and inexperienced private motorists.
Back in November 2013, a bloke called Malcolm Tarling from the Association of British Motorists said regarding telematics insurance that “experienced drivers can benefit from these policies, as they can be tailored to fit their driving habits” and an article on ThisIsMoney.co.uk1 pointed out that, for older drivers, restrictions like 11pm curfews “are less of a problem”. After all, the average car spends a whopping 95% of its time parked up2, and mature motorists are far less likely to jump in their cars and go for a drive late at night or in the wee small hours of the morning ‘just because’.
The ThisIsMoney.co.uk article wittily commented: “If you fancy yourself as safe behind the wheel you could benefit from telematics – even if you are an older driver like Top Gear’s Jeremy Clarkson, aged 53”. Telematics-based ‘pay as you drive’ (PAYD) motor insurance policies are an excellent way for experienced drivers such as the over-50s to alleviate premiums that seldom seem to be getting any cheaper, with discounted annual renewals typically awarded to men and women who are happy to prove their safe driving style and skill with the help of GPS. The Association of British Insurers (ABI) has published an excellent consumer guide on PAYD.
Awareness of and an appetite for telematics car insurance cover is growing here in the UK according to a survey of 1,445 adults reported on by The Actuary magazine online in April 2015, with 45% saying they’d consider such a product, 33% of those expressing a desire to better understand their own driving style and almost a quarter of respondents feeling positive that telematics would help them become safer and more efficient on the road. Older drivers from those surveyed indicated that telematics would appeal to them if reduced premiums looked likely.
Telematics no longer necessarily entails the installation of physical ‘black box’ hardware in a vehicle, with the advent of purely app-based solutions such as Better Driver from Carrot Insurance and Appy Fleet from Trak Global Group – a completely free of charge system designed for fleet managers.
With the RAC reporting an almost doubling3 of telematics use to 65% in 2016 amongst the businesses it surveys, it’s clear that many UK families will increasingly see their teenage and young drivers, experienced fleet drivers out at work and also grandparents all experiencing the benefits of UBI, making it a family affair.
Other countries are also witnessing the rapid growth in telematics motor insurance products, such as Japan, where leasing, rental and car-sharing firm Orix has announced the introduction of telematics specifically for older drivers aged 65+, the number of which exceeded 16 million not so long ago4.
By 2024, Tom Lewis5 from the comparison site advertised by that opera singer people either love or can’t stand, reckons that all car insurance policies will use telematics, which by that time will be opt-out rather than something people opt into – ensuring an exciting future for the market and for drivers alike.
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