Telematics

Technology – an important pillar in insurance industry

In every business field, the world is trying hard to understand the customer behaviour irrespective of how big or small the impact would be generated by that understanding. Today, almost every leadership team in pursuit of differentiating their products and services in insurance market makes an honest effort which could eventually bring down their cost in claims or increase their product sales. However, lately this perception of two way improvement is getting changed due to rapid evolution of third dimension – the use of technology- to make the insurance product effective in competition.

Usage based insurance - Getting one step closer to customer through telematics

Globally the Auto insurance market is expected to see huge transformation from traditional insurance based on demographics to usage based insurance (UBI) model. With multiple merits, usage based insurance provides behaviour based data points to understand one’s driving behaviour. Subsequently, this data is used to score the customer trips and arrive at customized discounts for the next premium cycle. Widespread availability of mobile networks and high penetration of smart devices have made the UBI model viable in the market. However major hurdles for UBI expansion lie in seamless integration of major partners in UBI- Auto manufacturer, telecom and insurance to create and consume the customer driving data patterns.



Above diagram explains how the data get captured and transformed in UBI value chain activities.
The driving data in terms of mileage, time of the day, breaking events and acceleration levels is measured during the trip. After trip completion, the trip data gets uploaded to cloud based server through mobile networks. Subsequently the trip analysis is attempted to score performance indicators for insurance premium discounts and to derive meaningful and actionable insights.

Safe road ahead through telematics

Apart from other benefits like discounts etc., use of telematics encourages safe driving habits in customer that would surely help to reduce minor and major road accidents. For policy holders, they would not only benefit from insurance discounts but also proactively encourage to carry out vehicle preventive maintenance with minimum average delay on scheduled time. For companies, telematics will help them to assess price risk effectively and identify business friendly costumers. However, more new and innovative technologies are needed for data management considering the scale of data collection and analysis required thereafter in insurance business. If telematics deployed successfully, the real benefit in insurance would surely come from risk mitigation and tapping the new product opportunities. The auto insurers, understanding the significance and telematics impact, would then require to tailor-made insurance product and services for individual policy holder.

SATENDER KUMAR
E2E Research

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