Telematics in the fast lane

Across the world a number of telematics-based motor insurance initiatives have been launched. But to date telematics has yet truly to make it in to the mass market. EMB’s telematics experts in the US and UK explain how a number of factors are converging to push telematics more into the spotlight.

What is telematics?
Telematics (also known as usage-based insurance (UBI) and pay-as-you-drive) is a means of pricing motor insurance policies based on monitoring where, when and/or how the motorist drives.

Motor insurance is a competitive business. That competitiveness, heightened by the advance of internet aggregator sites in some regions of the world, has made it increasingly difficult for insurers to maintain margins when writing personal motor business.

Telematics has been discussed as a potential solution to the pricing problem for a number of years since it appears to offer an immediate step-change in pricing accuracy. It stands to reason that if insurers can use information such as the fact that the accident risk per mile on a motorway in the UK is 80% less than on other roads (UK Government Road Casualties Great Britain 2008), then they can reflect that in pricing for customers mainly driving in lower risk environments.

Alas, the solutions to most things in life are not as straightforward as that, and so it has proved to date in telematics.

To read the full briefing paper, please click here.