Auto underwriting is no longer a "one size fits all" proposition, and technology - in the form of a telematics data exchange - is bringing a tailored approach to more effectively writing individual auto policies. The exchange is an accessible platform of driving information data provided by automakers, telematics service providers and Internet of Things providers. Through the exchange, insurers now have a single and efficient access point to data about driving information.
A telematics data exchange platform has the potential to transform relationships among insurers, consumers and automakers. The platform aims to complement existing solutions, also enabling insurers to bring their own usage-based insurance (UBI) models or other third-party models to the game.
With customer consent, insurers can review the driving history of consumers at point of sale and renewal of auto insurance policies. The exchange can also potentially help manage details of the automaker-insurer relationship, freeing automakers to focus on their core competency in developing advanced vehicles.
In the auto insurance marketplace, there are a few rules of the road:
- Every insurer using telematics data in determining respective pricing must make corresponding filings with state regulators. As a licensed advisory organization with established filing procedures and government relations, the exchange has the potential to file UBI models and rating guidelines on behalf of insurers, providing faster time to market.
- Although insurers retain the roles of underwriter and pricing specialist, the data exchange models provide an insurance score, one of the factors that insurers may use as part of their proprietary pricing and underwriting.
The telematics data exchange is a game changer because it brings benefits to insurers, policyholders and auto manufacturers. The power of data and analytics is being harnessed to bring a variety of benefits:
For participating insurers
- Easy access to telematics data without significant investment in technology and logistical support
- Improved customer satisfaction through fast, informed quotes at point of sale and renewal
- Enhanced customer acquisition and retention through innovative UBI programs that potentially attract and retain safe drivers
For consenting consumers
- Discounted insurance options for lower-risk drivers
- Portable driving history for ease of insurance shopping
- No need to plug in a telematics device or use a smartphone
- New revenue from connected-car data
- Lower total cost of vehicle ownership, which can help boost vehicle sales
- Additional opportunities for consumer engagement
As use of telematics technology gains acceptance and expands in the marketplace, is it any wonder the game is changing?