When talking to people about telematics-based car insurance policies I often see quite negative reactions. People often fear a loss of privacy if their insurance company can monitor exactly when, where, and how they drive their vehicle. However, they are exploding in popularity in the UK at present.
The British Insurance Brokers’ Association (BIBA) recently published data showing that 975,000 telematics-based policies were now active in the UK at the end of 2017. Almost a million people are now happy to have a ‘black box’ in their car monitoring their every move.
This is growth of 30% on the 2016 figure so the market is growing fast and it is having a dramatic impact on both the way that insurance is sold and road safety itself. The telematic specialist insurance company Marmalade says that their drivers with a telematic policy are 3 times safer than the average driver in the UK. That’s astounding – knowing that the car is being monitored has an enormous effect on safety. It’s like young teenage drivers being forced to carry their mum and dad in the back seat every time they go out.
But far from being a negative technology for young drivers, this can enable car ownership for them when otherwise it might be impossible. The average policy for a teenage driver in the UK is now several thousand pounds a year. If the driver can prove that they are a low risk and safe driver then they can immediately benefit from substantial reductions in the price of their insurance.
Since 2011 road casualties in the UK have dropped by 31.07% for 17-19 year-old drivers compared to an 11.06% reduction for the rest of the driving population. We are seeing a complete reversal of the old attitude that young drivers are the biggest risk – in fact they look like a better risk for the insurance company than older drivers who generally don’t use telematic-based policies.
BIBA is lobbying the government to reduce tax on insurance for younger drivers choosing to use a telematic-based policy, but I would argue that with statistics like this, why don’t they push for a significant price reduction for all drivers who are prepared to use this type of insurance?
Let me know what you think about telematic insurance. The statistics look fantastic, but would you be worried about revealing your location and driving data constantly to your insurance company? Leave a comment here or get in touch via my LinkedIn.