Telematics and The Future of Driving
Insurance companies are looking to install telematic technology in your vehicles. You have probably seen the commercials already. What exactly is telematics and how will this technology affect your insurance rates? Young Drivers of Canada will address telematics and help you get some clarity on this emerging technology in Canada.
Insurance companies have always had difficulty assessing risk when it comes to drivers. Standards have developed over time based what could be seen as unfair criteria. A great example is young male drivers who seem to get the short end of the stick when it comes to insurance rates. This demographic is usually penalized based on pre-conceived notion that they are considered to be more of a risk taker when it comes to driving. Telematics is the insurance industry’s answer to even out the playing field for driving by assessing their actual driving habits.
Telematics, What Exactly Is It?
Telematics is technology that monitors driver behaviour. When combined with a GPS device, the most sophisticated telematic device can track a multitude of factors. In addition to a vehicle’s mileage, telematic devices can capture simple date such as date and time as well as sophisticated dated including location of a vehicle, speed, harsh breaking, acceleration and cornering.
How does the telematic data captured help you as an insured driver? The answer is complex. If you are a driver with good driving habits, your insurance premium should reflect your driving pattern. If however, your driving skills are poor, your insurance premium will reflect that risk, something that may not be reflected by your premium now. Telematics should also eliminate the gender factor of insurance risk assessment, giving everyone an equal playing field.
There are some downfalls when it comes to telematics for insurance purposes. Each insurance company seems to be adopting their own device and will ultimately collect different data. More importantly from a privacy issue is who will own the data. When a driver decides to change insurance companies, will the “driving record” generated by the telematics data be transferred from one company to the other?
Another challenge the insurance companies will face is the determination of the factors that are predictive or can forecast driver behaviour and ultimately loss for insurers. How much data will ultimately be required to accurately assess the risk premium is also a question that remains unanswered. If you have a bad day on the road will that mean your policy will be affected. These are all questions that remain unanswered at this point as insurance telematics is in its infancy stage in Canada.
Young Drivers of Canada is very much aware of telematics and the relationship this technology will have with drivers in the near future. As a student enrolled in a Young Drivers of Canada driver education program, our goal is to educate and correct drivers on habits that will ultimately affect your insurance premiums in the future. Currently driver education is a factor that insurers look at as a benefit when it comes to calculating risk today. Driver education, in the eyes of an insurer is indicative of a pro-active behaviour to improve your driving habits, a benefit that currently reduces insurance premiums.
Telematics technology is coming, will you be prepared?