What is telematics technology, and why is it good for drivers?
Telematics technology is gaining speed in the automotive industry. Telematics encourages drivers to be more careful, keeps our roads safer, alerts drivers to potential dangers, helps insurance companies establish more accurate insurance premiums, and prevents insurance fraud.
More and more vehicles are now equipped with telematics, which combines a GPS tracking system with on-board diagnostics. Similar to the black box in a plane, telematics gathers data on things like vehicle location, travel speed, risky driving activity, road conditions and accidents.
What do we do with all this data?
Telematics data provides a clear picture of a driver’s behaviour, which is a strong indication of whether a driver will have an insurance loss or not. When shared with insurance companies, the data can be used to establish car insurance premiums based on actual driver behaviour rather than standardized demographics like age, gender and marital status and one’s driving history.
In fact, many insurance companies are favouring the use of data from telematics, known as usage-based insurance (UBI), over the traditional factors in determining insurance premiums. That’s great news for drivers who could see lower premiums as a result of their positive driving behaviour.
For drivers who may not realize a reduction in premiums, telematics can indicate where adjustments or improvements need to be made — such as driving slower, driving less, or taking corners at a better speed — to improve their driving record and possibly lower their insurance rates.
Better drivers and improved road safety
Telematics can also make any car a “connected car” providing safety benefits to drivers such as alerts to dangerous road conditions or accidents ahead, weather hazards or car maintenance requirements. Drivers can be steered away from potential problems with features like lane-change monitoring, rear view cameras and autonomous braking. Telematics could send emergency teams and insurance companies to the aid of a driver who’s been in an accident. In essence, telematics technology has the potential to save lives.
Fighting insurance fraud
When drivers commit insurance fraud, we all pay in the form of higher premiums. Telematics can help to fight insurance fraud by providing insurance companies with a play-by-play of events leading up to an accident. Adjusters will have the tools they need to determine precisely how and why an accident happened and who was really at fault.
Telematics is here to stay, and the technology continues to evolve. Drivers can feel more confident behind the wheel. They will pay insurance premiums that are reflective of their actual driving behavior. Auto insurance companies will see fewer claims, and have the information they need to reduce insurance fraud and lower insurance costs. And everyone can enjoy safer roadways.
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