Telematics Insurance - Chicken or Egg?
What came first? The careful driver or the telematics-based insurance policy? Or, put another way, is it the “black box” technology behind telematics policies that makes drivers safer, or is it that safe drivers are more easily attracted to this kind of car insurance policy?
Telematics-based insurance uses satellite technology to collect information on actual driving habits and bases policy prices on these rather than a series of broad driving assumptions.
Recent research carried out by Co-Operative Insurance (and highlighted on the Tiger.co.uk site) revealed that the 17 to 25 year old drivers that have bought the Co-Op’s telematics-based motor insurance product are 20% less likely to be involved in accidents than drivers of the same age with a “normal” policy. And, furthermore, that the accidents that they are involved in tend to be much less serious, with levels of claims being about 30% lower.
We’ve been actively promoting telematics products on Tiger.co.uk over the last 18 months, to the point that now about one in seven policies sold through Tiger.co.uk are to one of the four telematics insurance providers that feature on the site. Given that we expect to add another six insurers to our panel over the rest of 2012 you can see that this figure is only going one way.
So from where we’re sitting, telematics policies are becoming more and more popular. We’re forecasting that, by the end of 2012, over 20% of policies sold through Tiger.co.uk will be for these “black box” products. In the future we will undoubtedly see this number increase as car manufacturers start to build these boxes into most or all new cars. And it’s not just very young drivers who are finding that telematics policies can be much cheaper than “standard” policies. Over 80% of the policies sold through Tiger.co.uk in the last year have been to over 25 year olds.
What we are less sure about now is whether having a telematics device fitted to a car actually makes the driver safer. More likely, it’s the safer drivers amongst us who are more confident about having their driving performance – warts and all – continuously monitored. But does it matter? Not if drivers are finding that this kind of insurance policy can produce substantial savings to their annual premiums.
To find out more about telematics-based insurance you can check out our Guide to Telematics Car Insurance.