New technology allows insight into driving habits

Technologies such as event data recorders, telematics, and on-board video recorders offer an unprecedented level of insight into drivers’ behaviors, potentially leading to a more personalized approach to assessing risk, a report by Celent says.
Telematics and event data recording devices allow the option for more personalized measuring of risk, permitting insurers to refine the links between premium and risk, according to the report, ‘Vehicle Data and Telematics: What Does the Future Hold for the Insurer?’
Vehicle location, speed and driving times can now be monitored, in addition to data collection on specific, narrowly defined events such as hard braking.
“With better underlying data and the accompanying ability to price risk more accurately, insurers can roll out new types of products, often targeted at customers previously considered uninsurable,” a Celent release notes. “Information collected in the vehicle can also be used during the claims process.”
The use of telematics has brought about one of the most innovative products in insurance to date: pay-as-you drive insurance, the report finds.
Such an insurance policy allows policyholders to pay premiums based on their usage of the car, the report notes.
“The product is typically aimed at segments considered previously uninsurable, such as teenagers and drivers with alcohol-related convictions,” the report reads. “It allows insurers to target niche segments in the sector and to expand their appetite for risk.”