telematics insight

What is Telematics in Insurance? A Complete Guide for UK Insurance Professionals

Telematics is a prominent product offering in the current motor insurance market.

Focusing on rewarding safer driving styles and habits, it has given motorists the chance to reduce their premiums. As insurers look to harness the capabilities of Telematics technology, we've provided a guide for insurance professionals.

An Introduction to Telematics in Insurance

When considering the question ‘what is telematics in insurance?’ and where it sits in the marketplace, there are a number of considerations.

For insurance professionals, it can form the bulk of your service offering or it can be an attractive alternative choice for the consumer.

Telematics insurance has found a space in the landscape since its inception in the early 2000’s and its commercial rollout soon after.

Delivering statistically based evidence of driver behaviour and patterns, its tangible benefits are what drive its popularity today.

Now commonplace, the question is how best to harness the black box insurance strategy for the benefit of customer and insurer alike.

Motivating efficiencies across the claims process, reducing costs and claim lifecycle durations, this brand of

insurance has the potential to reshape the motor insurance landscape.

What is Telematics - A Definition

Telematics is the use of black box recording devices to monitor exact driving behaviours and patterns, rewarding positive and safe driving with reduced insurance premiums to pay.

These black boxes capture the relevant driving data – speed, braking intensity, etc – and transmit it to the telematics insurance provider.

This data is then stored and used to provide driver feedback that allows them to adjust their behaviours behind the wheel to become safer motorists.

The ideal knock-on effect improves the driver’s skills, making them cheaper to insure, thus reducing the premium for the customer and the expenses incurred by the insurer as the prospect of an accident is reduced

by better driving behaviour.

Either via a physical black box installed in the vehicle, a mobile app, or the vehicle's built-in OEM, there are different ways to cover a vehicle under a telematics insurance policy.

How Telematics Technology Works - Delivery Methods and Data Capture

The technology behind telematics never stops working, providing the vehicle is in use, always monitoring and maintaining a constant stream of data capture and transmission.

Whatever the method of capture and delivery – black box insurance, mobile app recording, or OEM – the device constantly tracks driving patterns.

Focusing on speed and acceleration patterns, as well as braking force and frequency, these indicators, including cornering forces, are recorded regardless of the time of day or night.

Telematics is a comprehensive method for gathering together relevant data that denotes a style of driving distinctive to the individual, highlighting trends and patterns that are either positive behaviours or negative ones.

An equally important offering is the crash detection algorithm. This is triggered when the vehicle is involved in an accident; this data capture can be lifesaving as it immediately sets off a chain of events that can provide much-needed assistance.

The technology can also identify location and route history, as well as mileage, which can all add to the profile of the driver.

How Insurers Use Telematics Data Across Underwriting, Claims, and Fraud

The value of telematics data can be seen across the insurance sector, from underwriting to claims to fraud detection.

An increasingly popular offering in motor insurance, risk-based underwriting is an option that provides ‘pay-how-you-drive’ and ‘pay-as-you-drive’ choices. Focused on rewarding drivers for better, safer driving practices, their profile – which is made up from driving data – dictates the cost of their cover, thus making that telematics data all the more valuable in identifying safe drivers and ensuring they benefit.

The start of the claims journey, which begins with an accident, is a complex point of data and evidence gathering to ascertain the circumstances. This is where telematics data in claims provides tangible benefits. An Automatic FNOL (First Notification of Loss) triggers vital next steps for driver safety as soon as a crash is detected. Liability assessment then relies on the objective nature of collision dynamics data, rather than more subjective witness statements.

This, in turn, assists in fraud detection, as the data can be used to counter certain claims that may seem unrealistic, with a better understanding of the event circumstances thanks to the range of data received from the vehicle and the subsequent pattern analysis that helps indicate where the accident took place, and indeed how it unfolded.

Whereas the practical, process-driven benefits are used by insurers, there’s also the highly prized customer engagement side of driving feedback. Very much encapsulating a ‘two-way street’ feeling with the driver, they know they can directly improve their premium cost by enhancing their driving style. This kind of feedback, and ability to track it (often through an app), harnesses this telematics data akin to a form of gaming, with rewards on offer.

"We were really impressed by the results of Winn Group’s 24/7/365 FNOL solution and the high client care standards maintained.

Using the 24-hour working operation to enhance their service offering, Winns is a market-leading accident management company offering a market-leading service."

Insurance provider

"Winns way of handling claims under one roof offers a seamless customer journey, which is invaluable to our policy holders, with customers particularly impressed by the attentive nature of staff and their ability to take the stress out of a difficult time in the aftermath of an accident."

Insurance provider

“We’ve worked with Winns for in over 15 years and found their customer care standards and delivery of service levels to be excellent, consistently delivering for our customers.

Their customer facing teams work quickly and hard for our customers; they’re a benchmark for the rest of the sector."

Insurance provider

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Benefits for Insurers and Policyholders

When reflecting on the benefits of telematics insurance, a prominent point for the insurer is the accuracy of the underwriting process; more personalised to the individual motorist, the process is now based on actual

driver behaviour and reduces the reliance on proxy demographics.

Insurers will also benefit from a significant cost saving associated with reduced claims processing cycles. Definitive evidence is established and collated in a more efficient fashion, reducing the time spent on that element of the claim, which in turn positively affects the overall time taken.

This collation of telematics data provides objective clarity and provides claims handlers with the ability to compare what the data says in comparison to witness statements. If inconsistencies develop, fraud could be an aspect to investigate. Seeing the warning signs sooner lowers fraud losses, lessens time wasted on fraudulent claims, and saves money across the claim.

Enabling providers to deliver faster customer resolutions in turn improves satisfaction scores for insurers as the motorist enjoys a slicker, smoother claims journey.

In a competitive and congested UK motor insurance market, the differentiation that telematics insurance is able to offer makes a company stand out among the crowd.

Future of Telematics in UK Motor Insurance

Telematics is sure to play a prominent role in the future of UK motor insurance. Although previously seen as the provision of younger drivers seeking to limit the cost of potentially sizeable premiums, the Insurance Times has discussed dedicated senior policies, with an ageing population, and increasing numbers of elderly drivers, potentially able to benefit financially from driving safely.

Designed to reward safe driving behaviour styles, there is plenty of scope for greater uptake in the future as many motorists feel the financial pinch and consider where they can make lifestyle savings.

Whatever the demographic, telematics insurance is becoming more established and is surely set to consolidate its position as a viable alternative to the more mainstream options.

Interested in learning more? Contact our Business Development Team today.

FAQ Section

What is Telematics in Insurance?

Telematics in insurance is a motor insurance product that bases its premium cost on individual driver behaviour. This profile is built using driving data that is transmitted from the vehicle to the insurer, providing real-time insight of individual driving patterns. The transmitting device can be a physical black box installed in the vehicle, or an app.

How Does a Black Box Work in Motor Insurance?

A black box is fitted inside the vehicle and is designed to record data relating to how the vehicle is being driven. Collecting information whenever the vehicle is active, this data is then transmitted to the telematics provider, who in turn use it to build up a profile, identifying patterns of driving behaviour to give a genuine picture of how safely the motorist is driving.

What Data Does a Telematics Policy Capture?

Most telematics set-ups will capture live GPS location, the speed of the vehicle, and G-force data, among other indicators of vehicle usage that helps create a driver profile which becomes indicative of the premium cost. Constantly feeding data into the system, the black box in the vehicle records data throughout journeys taken.

Do All Insurers Use Telematics?

Despite providing the flexibility to offer drivers discounts and lower premiums, based on good driving behaviour, not all insurance providers offer telematics as an option when it comes to their insurance product portfolio. However, many established, mainstream insurers utilise the technology giving younger drivers an opportunity to keep premiums down while they build up their experience and a period of no-claims.

How is Telematics Changing Motor Claims?

Telematics is a transformative part of the motor claims sector in the UK, changing not only the options available but helping different demographics to access insurance products that can be beneficial to them. Rewarding positive driving behaviour, its incentive-based motivation encourages drivers to improve bad habits and become less likely to be involved in an accident.

Start the Process Today

If you’re looking for an initial insight around telematics and its capabilities, take a look at our complete guide focused on Telematics Claims Management. If you’d rather talk to one of our business development team, we’d be happy to book a consultation for a time and date to suit you. Stepping into the telematics insurance provision sector could be a game-changing move; start the process today.

Business Development Team