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Telematics – tomorrow's technology for today's insurance

Satellite based GPS systems can track objects on earth with extreme accuracy, and in conjunction with information technology and communications, has been adapted to develop Telematics –the remote collection of data – and this has been used very successfully for several years in a number of industries.

The insurance industry has taken notice of the benefits of Telematics technology within these industries, in particular in cargo and fleet management, where every vehicle can be tracked and cargo monitored en route to its destination. Employees can be scrutinised for poor driving behaviour and help can quickly be despatched the scene of an accident. These are all undoubtedly positives to both employers and employees from the perspective of health and safety – and if you are a safe and law abiding driver, you have nothing to worry about.

Very recently, insurers started to offer motor insurance based on this technology, and although currently only a handful of insurance companies offer this scheme, many more are planning to do so. Commonly known as Usage Based Insurance (UBI) the insurance premium is based on individual driver behaviour rather than general statistics. The policies allow good, experienced and low mileage drivers to benefit from their patience and restraint on the road and penalise those who present more of a risk. This can only be deemed as fair and rewards those who drive safely and consistently.

The idea is that drivers pay a premium comprising a small annual charge, plus an amount relating to their predicted usage according to the miles they travel and the times those journeys take place. Daily driving during the rush hour is more expensive than at quieter times and mileage is continually calculated with discrepancies either refunded or added during the term or at renewal.

Telematic insurance is targeted at high risk groups of drivers and offers the benefit of reduced premiums in exchange for a limit on their hours of cover at a given price. 40% of serious and fatal accidents happen between 11:00pm and 5:00am and very often include young drivers, so young and inexperienced drivers are restricted at night and are rewarded for low mileage. That is not to say they are not insured at night, but if the vehicle moves, a large penalty is payable. Although this may appear irritating to a new driver, the benefits include reduced road the deaths of young men in particular – and obvious relief for many parents! Hitting youngsters in their pocket is often the best means of control, money speaks louder than words sometimes!

In contrast, drivers whose behaviour conforms to the insurance company's idea of 'safe' driving are also able to take advantage of the low premiums. This means someone who travels to work by train and only uses their vehicle at weekends can dramatically reduce their insurance costs.

Many insurance companies also track stolen vehicles and claim this allows them to recover most vehicles within an hour of a customer's notification. More comprehensive schemes available on the market consider speed and braking behaviour, automatically track when a vehicle has been involved in an accident, and can assess the cause and determine liability. Technology overload!

On renewal of the insurance, driver behaviour can be taken into account and the premium will reflect this. It is perhaps somewhat of a moot point that slower and less frequent drivers are safer drivers, as awareness, regular experience and other factors can affect the likelihood of an accident. However, with the EU dictating that gender can no longer be a criteria in risk assessment, it is useful and perhaps fairer to have a tracking system to establish a driver's individual behaviour and to charge them accordingly. Telematics is here to stay and to make the most of this technology is a sensible means of moving forward road safety. Insurance is a complex purchase in any case, add in technology and it is even more confusing, so take professional advice – call Westhill Insurance Services. Our friendly and professional team will give you all the advice you need and, as an independent insurance company, will shop around to find you the best possible deal to suit your budget. By speaking with a 'real person' you can explain your exact requirements and talk through any concerns you may have, so that the insurance you have for your vehicle is the insurance which will keep you smiling – all the way to the bank!

Contact Westhill Insurance Services, today.

Posted on 10th July, 2012