[#1 in a 2 part series]
Telematics? It’s a relatively new term that Canadian businesses are hearing more and more, often in the context of car insurance.
According to Wikipedia, “telematics as an interdisciplinary field encompasses telecommunications, vehicular technologies, road transportation, road safety, electrical engineering (sensors, instrumentation, wireless communications, etc.), and computer science (multimedia, Internet, etc.)”.1
[related matters:] Wikipedia’s Telematics Definitions In Depth
For a business, telematics has many potential applications and can be used to track cars, trailers, shipping containers, fleets of vehicles, satellites, wireless car safety and emergency communications as well as support car-sharing applications via smartphones.
Telematics And The Future Of Auto Insurance
The application of telematics into everyday life is already happening…right behind the wheel of many North American vehicles.
In fact, Wikipedia notes “the basic idea of telematic auto insurance is that a driver’s behaviour is monitored directly while the person drives and this information is transmitted to an insurance company. The insurance company then assesses the risk of that driver having an accident and charges insurance premiums accordingly. A driver who drives less responsibly, will be charged a higher premium than a driver who drives smoothly and with less calculated risk of claim propensity.”2
Invented by a leading U.S. auto insurer and an independent Spanish inventor, the first patents for telematic auto insurance “cover monitoring the car’s engine control computer to determine distance driven, speed, time of day, braking force, etc.”3
Telematics is seen to be a driving force for potential change within the auto insurance industry. Wikipedia cites research that predicts “global insurance telematics subscriptions could exceed 107 million in 2018, up from 5.5 million at the end of 2013.”4
Why Telematics Are Courting Controversy
Like any new technology that is in the early-adoption stage, the opportunity for insurance companies to monitor day-to-day driving habits is being met with many questions.
The installation of a device that uploads data about the activities of anyone who drives a vehicle can be seen as both a cost-saving benefit as well as a potential opportunity.
Contact an ALIGNED Insurance Advocate to learn more about how telematics and other tools and resources can help you better manage your business insurance coverage needs.
Coming soon: part 2 in this series will provide an overview of telematics and fleet insurance...