Use of telematics to surge in personal lines: Celent

The use of telematics, particularly in auto lines, will become commonplace, leaving insurers unwilling to make the investment in a position of adverse selection, reported Celent.
In its report, Telematics-Based Insurance: Has its Time Finally Arrived? Celent notes that several big insurance brands in the United Kingdom and the United States have launched telematics programs in recent months.
Telematics allows an insurer to micro-segment its customer base. Individual customers will ultimately get individual prices using personalised data, Celent said.
For example, in the United States, Progressive launched ‘SnapShot,’ a usage-based auto insurance. The product uses telematics (technology that directly monitors driver behaviour) to improve pricing, promote driver safety and reduce claims costs.
In the United Kingdom, 50% of the Top 20 P&C insurers have either implemented or are piloting a telematics-based proposition in personal lines. In the United States, the figure is 55%, Celent reported.
“Although programs are limited to niche segments today, as technology costs fall, privacy concerns recede, and regulations become more supportive, telematics is quickly moving into the mainstream and will fundamentally disrupt the motor insurance business,” the Celent report says. “This will change our core business.”