Is Mobile Telematics Technology Promising for Auto Insurance?

Car Auto

At a time when road accidents cause the death of millions, there is a need to check driving behavior through mobile technologies.

According to WHO, 1.25 million people die due to road accidents. WHO also estimates accidents will be the seventh leading cause of deaths globally. Is there a need to press the panic button in the face of these figures? What kind of education is required to check accidents or reduce the accident risks? Let us dwell deeper.

According to Bob Joop Goos, chairman of the International Organization for Road Accident Prevention, “Over 90% of accidents are caused by human error.” Human error is all about driving behavior, isn’t it? Well, if it is so there is a need for a driver scorecard for improving driving and making driving safe. This is to ensure that he get his insurance claim hassle free for losses incurred. Having come thus far, let us go into the technical aspects of enhancing ones driving behavior. Moreover, let us also consider whether one has to pay ‘fixed premium’ or ‘pay as you go’ or ‘pay how you drive’ for auto insurance.

A person living in the State of Alabama is paying $1,500 a year on an average. Suppose a person living in the city is paying $1500 where he is prone to more accidents against a person lives in the suburbs paying the same amount where less chances of accidents. Suburban drive is easy compared to driving in cities. Remember the city driver will drive lesser kilometers in comparison with the suburban driver who drives more. The city driver is prone to more accidents. On the other hand the suburban driver is prone to more wear and tear of his vehicle. If fixed premium is collected from both drivers, how does this make sense? Now if you are giving an option to choose between the following:

• Fixed premium annually

• Usage based Insurance (UBI) which is pay-per-use

What will you choose? Everybody wants to be cost effective; none wants to end up in loss. Therefore majority is likely to choose the second option. The reason is more customers are mobile. Customers can download the mobile application on mobiles to track their driving data. Risk assessment is easy with mobile telematics application. Assessing risks like driving at peak traffic hours, following traffic rules or not, parking hassle free, speed driving etc., and take necessary precautions in future with the help of tips provided by the application on mobile device.

Digital technologies are empowering the insureds to pay as you drive (PAYD) insurance, pay how you drive (PHYD) by the customer. How this is going to affect the insurance industry? This is another area that requires discussion.

Mobile telematics technology integrates technologies like Global Positioning System (GPS), Mobility, Cloud and Big Data analytics where driver uses data to enhance his driving behavior. This will reduce accidents. The mobile app gives information on like hard braking applied, rapid acceleration, road types, driving smoothness, phone distraction, traffic alerts, speed and mileage etc. Besides, insurers can deliver personalized services and bring in new customers by reducing processing delays. Club the advantage of enhancing driving behavior with Usage Based Insurance. This will surely get the support from State as well as from businesses.

Shall we gain more insights on this? Businesses are looking for productivity, government wants productive citizens. No one wants their productive ones to be injured or be a burden. It is in this context there is a likelihood where insurance companies, businesses, and government may work together to reduce productivity risks. Driving behavior is the prime cause for road accidents. Mobile telematics technology has the capacity to enhance drive behavior, reduce accident risks and workflow not disrupted.

Mobile telematics technology also has its bearing on automobile industry. As we know luxury automobile manufacturers come with inbuilt telematics, small brands charge extra for automobile electronic accessories. These black box technologies are pushing the cost of cars upwards. In such a scenario, mobile telematics technologies lowers technology cost with the integration of integration of technologies such as Global Positioning System (GPS), Mobility, Cloud and Big Data analytics on smart phones. Advantage for would be vehicle owners.

At a time when deaths caused by accidents are listed as seventh worldwide government, insurers, businesses and the general public, mobile technologies offer hope to reduce risks. Canada is hosting Insurance Telematics Canada 2016 on 28, 29 April at Double Tree Hilton, Toronto. In the previous year 2015 43% of insurance companies attended the event. This year the event intersects auto tech and insurance expecting more attendance to brainstorm.