Telematics for the people
Telematics insurance has helped cut car casualties among 17 to 19-year-olds by 35%, clearing the way for mass-market adoption of this groundbreaking technology
New analysis of the latest UK road casualty statistics by LexisNexis Risk Solutions has begun to uncover compelling evidence that telematics insurance has played a role in cutting claims costs for insurers among the youngest, most vulnerable drivers, by helping to reduce casualties by more than a third since 2011.
Car casualty rates among 17 to 19-year-old drivers have fallen by 35%, compared to 16% for the driving population as a whole. The one major difference between young drivers and their older counterparts is telematics insurance, with four in five young drivers estimated to have a telematics policy today.
CUTTING ACCIDENT RISK
This is the first time road casualty statistics have been analysed in direct relation to the exponential growth in telematics policies since 2011, with 975,000 live policies in 2017, suggesting telematics insurance has done more to cut accident risk than other road safety initiatives aimed at the young driver market.
The 35% reduction in road casualty rates in 17 to 19-year-olds is despite a 10% increase in the number of vehicles on the road (2011-2016) and a 7% increase in the number of driving licences held across all ages since 2012.
The analysis underlines the drive in the insurance sector to extend the benefits of telematics insurance into the mass consumer market with telematics policies and data-collection solutions for specific customer segments, each lowering in cost to the insurer as the driver risk lowers.
Graham Gordon, director, global telematics, LexisNexis Risk Solutions, says: “Our analysis and interpretation of the publicly available road casualty statistics, factors [in] key road safety advances such as improved roads, better junction design and new car safety technology – but the marked downward trend in the 17-19 age bracket points to an additional factor at play, the increasing availability and adoption of telematics insurance.
“This analysis is vitally important. It helps validate the sector’s significant investment in the proposition, by providing firm evidence of the role of telematics in cutting claims losses while improving the market’s ability to offer insurance to the most risky drivers on our roads. But most importantly it reveals the mass-market potential for telematics, to help arrest the recent rise in road casualties in the wider motoring population and enable the market to truly realise its investment in telematics.
Mr Gordon continues: “With such a growing body of evidence showing that telematics is having a direct impact on cutting road accidents and thereby claims costs, combined with the fall in costs for the sector, the evolution of telematics insurance with products for each customer segment is already well underway.”
“The cost of offering telematics has fallen dramatically for the insurance sector – we estimate data acquisition costs have fallen by as much as 50% since 2013”
CII TRUST INDEX
The CII’s own Public Trust in insurance research published this year recommended that insurance providers consider how to move from just the provision of insurance policy products to becoming partners in the shared endeavour of managing customers’ risk. Out of nine key themes or ‘building blocks of trust’ that emerged from the language the consumers used to describe trust in insurance in the study, the theme of ‘Relationship’ emerged as an area where insurance providers currently do not match customer expectations.
Genuine relationships are vital in building trust and there is a significant opportunity for insurers to demonstrate that they care about improving the lives of policyholders, rather than just the policy that is held as a commercial transaction. Product innovations such as telematics that provide instant feedback to improve driver behaviour, lower premiums and save lives helps combat the perception that insurers only act in self-interest. Furthermore, it will offer the sector new ways to add value and become more important to customers, while also achieving the efficiency benefits of being better aligned around what customers really want.
- Road safety figures have generally plateaued since 2011/2012
- Some 500 people are killed or seriously injured on UK roads every week
- In 2017, 1,793 people were killed on UK roads, an average of five people every day and just under 25,000 people were seriously injured
- Some 73 people a day are either killed or seriously injured on UK roads; last year’s annual total was the highest since 2011
- There has been a 6% increase in the number of deaths on motorways
- Car accidents are the biggest killer of teenagers, according to the World Health Organisation
- Drivers aged 17 to 24 currently make up only 7% of drivers, but they represent nearly 20% of the people killed or seriously injured in car crashes
- The 18 to 25-year-old age group makes up close to 25% of all motor insurance claims
- In 2012, among 17 to 19-year-olds, for every 37 drivers there was a casualty. In 2017, this increased to one in every 48 young drivers – a 29% improvement
- The government estimates that road traffic collisions cost the UK economy in excess of £16.3bn a year.
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