Usage-based insurance is gaining traction
Usage-based insurance coverage had, once upon a time, been considered little more than a fantasy. Now, however, it is becoming much more of a reality as we see insurance giants roll out their new auto insurance plans based on this technology. As the term suggests, usage-based insurance is based on driving behavior. This means that policyholder’s rates are based on how many miles driven, what time of day and safe driving habits and more. Determining whether or not coverage is in use can be a tricky issue. Luckily, the demand for usage-based insurance has sparked the development of technology that can facilitate this kind of coverage effectively. The proliferation of telematics devices in vehicles has facilitated the development of UBI.
Technology unlocks new potential in auto insurance
The technology in question is called telematics, a term that is typically used to reference the combination of informatics and telecommunications. This technology is not entirely new to the world, as it has been used often in the past for vehicle tracking and other purposes. Telematics is new, however, in the insurance industry. As auto insurers begin growing more flexible in several markets, they are beginning to put more focus on the use of telematics in order to facilitate usage-based insurance coverage.
Telematics is relatively simple to understand. The technology, which often exists as a small and discreet device, can be installed in nearly any vehicle available on the current market. The device records data as the vehicle is in operation, collecting information concerning the speed, distance, and performance of the vehicle. The device also records data that could be associated with a person’s driving habits. All this data is used by an insurer to determine the costs of a driver’s auto insurance coverage. Because this coverage is not in use at all hours of the day, telematics enables insurers to charge policyholders for only the time in which the coverage is actually being used.
Telematics could be considered a boon for drivers, but it also may have a great deal of appeal for auto insurance agents. Agents must often find ways to attract consumers to certain types of coverage but the tools available to these agents can often been somewhat inflexible. The idea of usage-based insurance is quite popular among consumers, but many drivers are not fully aware that it exists. Agents that leverage telematics could catch the attention of these drivers and find it easier to sell new auto insurance policies.
Industry showing more interest in usage-based coverage and technology
The insurance industry is beginning to take telematics and usage-based insurance coverage more seriously, particularly because of the favor consumers appear to have for such coverage and technology. This growing interest from insurers is likely to be on display at the upcoming Insurance Telematics event, which will be held in Chicago, Illinois, in September of this year. The event has already begun to attract a great deal of enthusiasm from auto insurance companies. Notably, insurers are not the only ones showing interest in telematics. Much of the auto industry has also begun favoring this technology for more than just testing the capabilities of new vehicles.