Young drivers are most likely to be involved in car accidents and being able to tailor a policy to an individual’s driving is better than assuming that all drivers are the same. Low mileage drivers will benefit from Usage Based Insurance (UBI). It adds fairness by having different premiums for someone who only drives 1000 miles per year to those who drive in excess of 20,000 miles per year. Drivers who have recently passed their driving test and are taking out their first policy will be considered high risk. With vehicle telematics insurance, premiums could be low at the outset or within the first few months, after drivers have been given a chance to prove themselves. Telematics based premiums can become beneficial for drivers who travel within the speed limit and an indicator of those who don’t.
The following publications provide insight into how telematics data can be leveraged and combined with other sources of data to profile drivers for the purpose of calculating insurance premiums. This approach would also identify where drivers reduce speed when they see a roadside speed camera and increase speed once they have driven past it, a behaviour that drivers often exhibit even if they were driving at the speed limit to begin with. Telematics promotes consistent driving and steers away from erratic driving; pun intended!