Telematics Insurance: The Ever-Evolving Technological Advancement

Have you ever thought about how technology is overtaking every sphere of our life? At a time, technology was not new to everyone and not much developed. In today’s world, technology has become a common thing and also get highly advanced. No matter what your business domain is, you definitely would be using some kind of technology to conduct your business functions. Let’s discuss one of the trendy technological advancements in the Insurance industry — Telematics.

What is Telematics Insurance and How Does it Work?

Telematics is the use of GPS technology and onboard diagnosis to monitor automobiles. This system gathers various information regarding the vehicle such as its location, driver’s behavior, vehicle activity, engine diagnosis, etc., and visualizes this data on software to help operators easily manage their resources. This technology is currently also used by insurance agencies to customize their prices.

A device is set on the vehicle to monitor its activity and the driver’s behavior on the roads. Insurance companies use this data to increase or decrease the price of insurance according to the risk the drivers are posing to themselves and others. For example, if a person is a responsible driver and drives safely by following all the traffic rules, then he would get lower insurance prices as compared to the one who is not a responsible driver and poses a great risk to himself through his driving methods. These records are used to determine the vehicle-specific insurance prices for the owners according to the risk attached to their vehicles.

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Where can a Telematic device be applied?

To allow the telematics system to work efficiently for insurance agencies, the vehicles must have something that can give the required information to the operators. A device has to be set on the vehicle and there can be many options for that. Let’s discuss them.

Mobile Application

Insurance agencies can provide their customers with a specific mobile app that helps them track their vehicles' movements and conditions. This would also help telematics insurance companies in India to promote themselves in the market by providing additional features in the app such as maintenance services or feedback options.

Connect-in Devices

A special device, like a pen drive or something else, can be used to connect to the vehicle to serve the purpose of telematics. This can track the vehicle and provide the information to the operators.

GPS System

Advanced GPS systems can also be used to track the movements of the vehicle and share the required data to monitor the vehicle’s performance and driver’s driving habits.

Onboard Sensors

An onboard sensor is also a good option for such a purpose. It can easily collect various information related to the vehicle and the driver’s behavior to calculate the correct insurance price.

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Detecting Mileage of the Vehicle

The operators can also track the mileage of the vehicle to evaluate its performance. The distance covered by the vehicle can also be used to determine the driving pattern and the risk attached to it.

What can be the uses of Telematics Insurance?

Telematics insurance or usage-based car insurance is a very useful technique to determine the perfect insurance policy for customers. It can be used in many ways to benefit both insurance companies and customers. So, let’s see what can be the several uses of telematics insurance.

Providing Accident-related Information

As telematics provide real-time information about vehicles, it can also be used to determine the cause of the accident and the real offender. These reports can also help in improving road conditions by detecting potholes or damaged roads through vehicles, thus, reducing accidents caused because of bad road conditions or any such cause.

Tracking the Trailer

The trailers can be tracked with telematics technology and thus the location unit attached to it can also be tracked. This can be helpful in tracing back the trailer’s way to its unit.

Helps in providing Research Data

Telematics technology can also be useful for researchers to get statistical data about vehicles and drivers’ behavior in any particular area. This research can be helpful in bringing new insurance policies to the market based on a city’s traffic.

GPS Anti-Theft Services

GPS tracking devices are now mandated on vehicles to prevent theft. Thus, this serves as an anti-theft system, reducing theft cases and customers’ chances to claim insurance due to this.

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Preventing Fraudulent Activities

Telematics insurance can be helpful in explaining the mysterious disappearance of any vehicle. Thus, usage-based car insurance companies can assist in uncovering and reducing fraud related to automobiles.

Customizing the Insurance Cost for Varied Customers

If someone is a safe driver, then they should get lower insurance policy rates as they are not much at risk. Telematics collects data on drivers’ behavior and thus reduces the cost of various customers. 

Easy Risk Management for Insurance Companies

With the help of a telematics system, insurance companies can easily determine which customer is at more risk of engaging in an accident. This can help the companies to offer a high-rate policy to the customer and mitigate their risk.

Satellite Navigation

Satellite navigation can help drivers to find their location and plan the best route to their destination. This could help the driver to reach his desired destination without getting lost.  

Wireless Communication

Telematics services can also help in passing on safety information quickly from one vehicle to the other to reduce the dangers. This can help the drivers to know about the positions and speeds of other vehicles nearby them.

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What benefits does Telematic Insurance offer?

The introduction of telematics in the insurance industry has become a boon for everyone. It provides various benefits to the insurance company as well as to the customers. Telematics insurance companies can determine the risk associated with the customer and provide them with the perfect plan most suited to their particular requirements. Customers who are good drivers do not have to pay a large amount as a premium for their safety as they are already highly safe on the roads. Let’s discuss more such benefits of telematics insurance.

Increased Customer Engagement

Telematics insurance helps in classifying customers based on their driving skills. To offer customer-specific services, insurance companies have to monitor their customers through mobile applications or other devices. This also involves providing regular feedback to customers to improve their driving, thus increasing customer engagement. This increased level of customer engagement also leads to high customer satisfaction.

Reduction in Insurance Cost

This is the most important benefit of telematics insurance. It helps customers to reduce their overall premium costs based on their driving skills. This scheme provides customers with low-cost insurance policies. Usage-based car insurance in India not only benefits customers but also helps insurance companies to reduce their risks. Since the insurance amount is based on customers’ driving skills, so if the customer is a safe driver, then he is least likely to be engaged in an accident, thus the risk is lowered; and if the customer is a rash driver, then they are more likely to damage their vehicle, thus the companies charge more amount to balance their anticipated risk. And this is how the insurance amount is effectively balanced with risk.

Competitive Edge

You must be wondering how can providing specialized insurance rates to customers based on their driving skills help you provide a competitive edge. Well, understand it this way. If you provide customized rates based on users’ driving skills, then you can balance the risk occurred because of rash drivers with safe drivers. Thus, you save a lot of money and so do your customers. You will attract lots of customers due to low charges. This will make you competitive in the market and also increase your sales simultaneously.

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Makes Companies Tech-Friendly

The involvement of such a high-tech system to assess the right amount of premium for customers based on their driving will definitely help you cast an image of a tech-friendly company among your potential customers. This would make a positive impact on the public about your company helping you to attract more customers.

Is there any Scope for Increased Customer Satisfaction through Telematics Insurance?

There is a huge scope for an increase in customer satisfaction levels due to telematics insurance. This would give lots of benefits to customers, which will provide them great satisfaction with your services. Following are some of the benefits to the customers that will increase their satisfaction as well as trust in your company.

Effective Prices

Telematics insurance in India helps safe drivers to get their vehicles insured at highly effective prices. This also encourages customers to invest more in your company.

Transparency in Pricing Methodology

Setting the premium amount based on drivers’ skills can help companies to maintain transparency in their pricing method. This would not lead to any kind of distrust among the customers as to why they have been charged more than others.

Good Health of the Vehicle

The software used to monitor the driver’s performance also helps in monitoring the vehicle’s health. It tells the driver when the vehicle needs maintenance, so it won’t cause much later. This keeps the vehicle in good health.

Improves your Driving skills

The insurance policy costs more to bad drivers than to safe drivers as the amount is based on their driving skills. Thus, people are encouraged to drive safer.

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Summing Up

With advancing technologies, the world has transformed. This has greatly advantaged insurance companies with the introduction of telematics insurance. It allows them to balance the risk associated with varied types of drivers. This type of insurance policy helps companies to determine the type of customer and offer them a plan accordingly. This also benefits the users who are safe drivers and associate less risk to their vehicles. Telematics insurance is a very good example of the high technological advancement taking over the world.