Auto Insurance Telematics – The three-minute guide – Deloitte

Article Synopsis :

Auto insurance premiums have traditionally derived from loose proxies such as demographics, credit scores and location. But with the advent of UBI and telematics carriers are basing premiums directly on the driving behaviours of customers.

UBI: Fad today; norm tomorrow

In the summary report “Auto Insurance Telematics – The three-minute guide”, Deloitte presents their view on how embracing UBI and telematics can give an edge to carriers in the fast changing auto insurance landscape. The report suggests three main benefits:

• Manage risk more effectively
• Retain lower-risk drivers
• Attract new market segments

Moving ahead with telematics requires strategic thinking in two areas:

• Collection of driver data: What is the preferred method of data capture? What period of time is necessary to gather a sufficient amount of data to provide meaningful insights into driver behaviour?
• Assessment of third-party vendors: Identify and verify  vendors capable of providing advanced data collection,  industry-leading data security standards, systems reliability, advanced analytics, knowledgeable advice, and features that align with growth plans

Carriers deciding not to offer UBI policies will at least need to develop a strategy for protecting lower-risk (i.e. higher-profitability) policyholders from competitors angling to cherry-pick them with UBI offerings.

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