What Is Telematics for Car Insurance?
“What gets measured gets improved” - Peter Drucker
My daughter turned 17 in April. I’m looking at the options for insuring her to drive. None of them are cheap.
Having been a motor insurance underwriter for many years I know there are good reasons for this.* Firstly, with no previous driving experience, she has not yet earned a No Claims Bonus. Secondly – and of much more concern to me as a parent – young and inexperienced drivers are much more at risk of being involved in a serious road traffic collision.
Statistics from the 2016 census record that 12.1% of the population of Ireland are in the age range 15 to 24 years1. The Road Safety Authority report “Provisional Review of Fatal Collisions January to December 31st 2017” records (at Section 7) that 18 drivers killed on Irish roads during 2017 were aged 16 to 25 years. This represents 26.9% of the total2.
What is Telematics?
In relation to motor insurance, telematics is use of a device in the car which measures the following in relation to driving the car:
Severity and frequency of braking, acceleration, and cornering
This information is used to ‘score’ driving performance. Driving performance over a period of time is used by insurers in the assessment of risk, i.e. to decide if risk is acceptable and to determine the insurance premium.
Driving scores from the device can help the driver to see ways to improve driving performance.
Allianz Safe Driver App
The Allianz Safe Driver App is a good example of an initiative aimed at incentivising safe driving by young and inexperienced drivers. As the name suggests, the telematics solution used is a phone app. The only cost to the user is mobile data connection.**
**The user may decide to upload the journey data straight away, using mobile data, or wait until they are connected to WiFi.
Your child, aged 17 to 25, as an additional driver on a parent’s policy, uses the Allianz Safe Driver App to track and score their journeys as the driver. The app uses positioning in the car, speed, and other analytics to determine what mode of transportation is being used (i.e. car, bike, train), and whether the user is a driver or passenger.
The driver will benefit in two ways from attaining an acceptable score measured over a period of time:
- Where they have at least 2 years monitored driving, Allianz will allow a ‘year for year’ introductory no claim bonus when they seek a policy in their own name.***
- The policyholder of the family car may receive a premium discount whilst the young driver is an additional driver on that policy.***
***Subject to qualifying criteria including but not limited to:
- Minimum of 2 years monitored driving and with no claims arising within the last 12 months of monitored driving
- Full driving licence
- Minimum 500 km of monitored driving
- Minimum 1 monitored drive in every 3 month period
A Win Win Win?
A car insurance offering based on telematics can be a win for all concerned parties. As a parent, you may have peace of mind knowing your child’s journeys are tracked and driving performance is measured. Insurers can justify insuring young and inexperienced drivers and can discount premiums based on driving performance. And young, inexperienced drivers may have access to more ‘affordable’ insurance products.
*Martin McRandal was previously an employee of Allianz p.l.c.
Allianz p.l.c. is regulated by the Central Bank of Ireland. Standard acceptance criteria and policy conditions apply.
About the author:Business owner, consultant, and expert witness. Former motor and property insurance underwriter.
Date:August 12th, 2019