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Insurance Telematics Explained


The basic idea behind telematic insurance is that specific use of a vehicle and the driver's behaviour in terms of how the vehicle is driven are monitored in real time, and this information is transmitted from a device in the vehicle to an insurance company. The insurance company can then assess the risk of that driver having an accident and tailor their insurance premium to the individual.

Read on to find out how insurers, brokers and drivers can harness the benefit of machine-to-machine communication and all benefit from insurance telematics.

Drivers:
 

The most obvious advantage for drivers is reduced cost and more tailored insurance premiums, which will be based on how the individual actually drives, rather than the average attributes of a driver’s age group or profile.
 
Insurance telematics customers can also benefit from further added value services, including;

  • Mileage and fuel budgeting
  • Adopting a safer driving style to reduce the risk of having an accident
  • Changing driving style to achieve fuel economy
  • Route management to avoid accident hot spots
  • Stolen vehicle recovery services
  • Safe parking

Insurers:
 

Insurance telematics is a huge opportunity for insurers. The ability to improve overall risk performance through segmenting drivers by how they drive, when they drive, and where they drive, is an exciting area for pricing and underwriting.
 
TRACKER understands insurance companies.. Insurers face a considerable challenge in moving to individual driver and vehicle rating in setting premiums, and in adapting their existing processes, data files and systems with the challenges and opportunities afforded by telematics. We can provide insight and experience in these areas, with staff that have developed telematic based offerings and held senior management roles within insurance.

The benefits of insurance telematics are clear for insurers through improved risk selection and pricing, reduced claims frequency, improved fraud detection, and reduced claims costs.
 
  • Improve claims ratios
Crash detection and alerts provide instant First Notification of Loss (FNOL) customer contact to improve third party capture and protect against fraudulent claims.
 
  • Improve customer attractiveness
Offer customers the potential of cheaper insurance premiums.
 
  • Increase your confidence in the outcomes
Data can be supplied raw , through to refined Event scoring based on TRACKERs unique “9 years of driving experience” data, through to a single adjustment based on the TRACKER Score.
 

For Brokers:

Countless different device providers, different insurer propositions and competing broker offerings, creates a daunting telematic marketplace for brokers. TRACKER can assist in clearing that fog away by complementing your experience in distribution and customer service, with our knowledge of devices, installations, data analysis, customer feedback and system integration.

  • Differentiate your offering
With insurance telematics, brokers are no longer limited to offering customers a “single premium for a single device from single insurer based on a single proposition”. Now, you can take data from different devices, ranging from professionally installed black boxes, to customer installed, to smartphones,  and produce data analysis for pitching to insurers and develop bespoke schemes using different devices.
 
  • Improve claims handling
Device based triggers can inform your claims handling before your customer has even called you. Turning a passive inbound process into a proactive outbound one.

 

Direct Line and TRACKER

TRACKER was appointed by Direct Line to provide an end-to-end service for their trial of telematic insurance. Motor insurance customers were offered reduced premiums in return for participation in the trial. TRACKER determined for Direct Line the appropriate device and the various different data collection required by the insurer’s underwriting & pricing team.

Direct Line also wanted to explore the customer response to fixed locations for installation so TRACKER has undertaken training of Direct Line’s Accident Repair Centres staff so that installation can be undertaken at these centres as well as through TRACKER’s installation staff.
 
TRACKER is working with Direct Line to analyse telematic data coming from various staff and customer journeys, to determine which data elements have what level of correlation with a propensity to have a claim.
 
While TRACKER’s existing capability in offering customer facing services is based on ‘black-boxes’, data management via its fleet management capability and market insight through its knowledgeable staff has supported our own thinking.
 
“Direct Line is actively learning how to measure the opportunity from insurance telematics before considering whether to launch a customer offering. TRACKER is fundamental to this development path.” Andy Goldby, Pricing & Underwriting Director
 
If you are a broker or an insurer, find out how TRACKER can help you develop your insurance telematics offering by calling 0845 604 5998 or e-mail insurance@tracker.co.uk
 

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