Thursday, September 27, 2012

Usage Based Insurance Gives Companies The Competitive Advantage

With new technology, insurance companies can go beyond offering good driver rates to providing usage based insurance that produces a continuous record of driving habits to create personalized profiles. This full driver picture gives underwriters accurate information on risk levels so that the number of claims to an insurance company is reduced.

This tool for measuring driver behavior, known as telematics, gives insurance companies a personal measure because each policyholder is assessed on his or her driving skills in areas like hard braking, fast acceleration, distances travelled and following traffic regulations. The former method of assessing drivers was basically through lack of claims, but there was the unknown factor of how they actually performed on the road daily. Telematics dispenses with any generalization of drivers, and a policy now becomes customized to individuals.

Telematics can now offer its policyholders the next tier of benefits with usage based insurance that can scrutinize driver behavioral patterns and provide an individualized, tailored insurance plan. Some policyholders have felt they were wrongly assessed for good driver policies based primarily on their claims record, but this technological advance will even the playing field so that both insurance companies and their clients can have a stronger relationship. The scope of auto insurance telematics is wide as it also provides useful data in a variety of applications such as young drivers who can measure improvement in their driving skills, fleet operators to have full awareness of the location of their vehicles and their use, and rental companies for an accurate user history of their inventory.

Data gathering through telematics for the purpose of usage based insurance is provided by a secure integrated wireless network that is comparative to what banking institutions use, firmware is upgraded remotely and IT support and multilingual customer service is always available. Installing a telematics device in a vehicle is uncomplicated and can effortlessly be performed by the policyholder or vehicle owner. As well as being a data gatherer, the policyholder or vehicle owner will be able to subscribe for additional services that include aiding the driver to summons emergency services, and monitoring battery charge that will be an increasingly important feature with the expanding popularity of electric vehicles (EV).

As the insurance industry becomes more complex, providing policyholders with methods to keep rising costs in check will ultimately determine customer loyalty, while providing companies with accurate information using cost-effective measures. Usage based insurance is reality, and having telematics drive data gathering is highly useful for underwriters, insurance companies and policyholders by keeping step with the needs of the consumer.

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