Home / Insight / A new customized approach to insurance: telematics-based insurance

A new customized approach to insurance: telematics-based insurance

The ecosystem of connected car technology has cultivated another growing trend of telematics-based insurance, which promises to create a boom for the automotive insurance industry. In our previous articles, we have already explained what is telematics-based insurance or usage-based insurance or pay as you drive. These terms define the tailored insurance program depending on an individual’s driving pattern providing the financial incentive for driving safely. Generally, telematics-based insurance products are categorized into two models: pay how you drive (PHYD) insurance and pay as you drive (PAYD) insurance.

Pay how you drive insurance

  • Pay how you drive insurance focuses on the driving behavior/pattern of an individual to assess the possible risk and calculate the annual premium.  Insurers monitor driving behavior and adjust premiums based on observed risky behaviors. This program is designed specifically for low-risk drivers providing them better premium discount rates. 

Pay as you drive insurance

Pay as you drive insurance focuses on the monitoring of precise mileage driven and calculating premium based on that mileage. This model is based on the assumption that the less time a driver spends on the road, the less likely it is for an accident to occur. Insurers verify time, mileage, and location by using telematics to ensure the transparency of purchased protection and combat mileage reporting fraud.

According to the survey conducted by a private insurance firm, today the number of telematics-based car insurance products are more precedent than ever before. As per the survey, in the last three years, the number of these products have been doubled which suggests that the old trend of targeting the young drivers have been changed and low mileage drivers are also targeted now. Most of the insurance policies allow access to an online dashboard which can help the driver in reviewing their driving pattern and improve it. Moreover, some of the telematics-based insurance also provides you the insight of theft assets and accident alert systems. 

 

What are the data elements in telematics?

Have you wondered what are those elements that are monitored in telematics-based insurance but not in traditional one, we have mentioned some of the elements in the list below

Traditional insurance  Telematics based insurance 
Insurance credit score  Fast lane change 
Age  Miles drove 
Gender Harsh acceleration 
Marital status  Harsh braking 
Use of the auto  Harsh cornering
Territorial information  Airbag deployment 
Past driving records  When the vehicle is driven 
Driver education  Weather condition 
Traffic condition 

With the right kind of feedback and coaching, demand for telematics will continue to accelerate as added safety and lower premium costs offer tangible proof of its benefits.

 

Looking for more information? We are here to help.

Please call Mr. Jamal +966 56 638 7859 or write us at news@dms-ksa.com

Digital Myth Solution

About Ayesha Amjad

Check Also

Breakdown factors impacting telematics pricing

Breakdown of the factors impacting the telematics pricing.

While in an industry providing telematics solution to a diverse range of customers belonging to …

Processing...
Thank you! Your subscription has been confirmed. You'll hear from us soon.
ErrorHere