The latest on telematics
Posted on: 01 April 2015
The government has recently announced that it wants to improve driver safety among young and novice drivers through the use of telematics. The initial review starts in April. This comes as result of intensified interest by concerned parents, road safety charities, public health bodies and the insurance industry for government action on the topic, since a proposed green paper concerning the topic of young drivers was postponed indefinitely in early 2014.
Statistics demonstrate that young and beginner drivers are much more likely to be involved in road traffic accidents. In fact, one in five drivers are involved in a collision within six months of passing their test. In 2013 alone, the value of preventing accidents involving at least one young driver was an estimated £3.75 billion to the UK economy; amounting to 25% of the total value of accidents that occurred in the UK in the same year.
As a response to high insurance premiums for young and novice drivers, insurers have introduced telematics to qualifying customers. In many cases it has been small specialist brokers who have been leading the way, demonstrating that specialist knowledge, the right set-up and targeted marketing can allow brokers to gain market share in areas in which they perhaps have not previously been competitive.
Telematics has had a regulating effect on drivers using the technology, with on average 30% less claims than comparable standard policies. Existing telematics policies usually offer a discount from 5-15%, depending on the risk, in recognition of this.
What remains unclear, however, are the exact causes of this change in claims frequency experienced as a result of using telematics;
- Is it self-selection of telematics policies by safe drivers?
- Is it incentivisation?
- Is it detailed feedback on customers’ driving?
- Or is it a combination of all these elements?
This is the area that the government is in the process of commissioning research into.
A car is often a necessity and we strongly support the view that young people should be given the opportunity to demonstrate that they are safe drivers and be supported to improve their driving. Telematics can help them do so; we’re significantly investing into the field of telematics and are supporting the government initiative to further investigate the impact telematics can have on young driver safety.
If you offer cover for young and novice drivers, we know you’ll want to stay up to date with the ongoing developments in telematics to understand how the technology might benefit your customers. The upcoming government review provides yet another indication that there exists serious consideration for the benefits of telematics, which may start a much wider rollout of the technology within the industry.