Top US auto insurance companies with telematics program*:

How to integrate telematics data into traditional pricing has always been critical decision for insurance companies. Different pricing strategies have been adopted and are in existence currently based on the data collected (as above). Distance travelled (e.g. miles driven) and time of day are the most common data elements used. Other data elements like speeding, aggressive driving etc. are less commonly used as they are heavily influenced by the type of roads and road conditions. Some companies are also experimenting with GPS based devices but the adoption is slow.

Also plug-in devices available today are not standardized (i.e. may not collect and / or code data in the same way) and rely on communication infrastructure to transmit the data. This makes a telematics program very expensive for many insurance companies. Further, storage and processing of big data collected by the program also adds to the cost of the program. Although the cost of actual devices has come down over the years, the overall program still adds significantly to the expense ratio. This is where smartphone telematics and DrivSafe's telematics system comes in - the DrivSafe software is available to download for FREE for smartphones and utilizes already existing mobile hardware and global positioning system in a mobile phone resulting in minimal cost for the companies. The company also offers storage and big data processing solutions for easy adoption without big upfront investment. Telematics information is redefining the auto insurance industry's pricing norms.


Companies are making every effort to keep up with this new trend and provide its customers the best opportunities to earn discounts based on their driving capabilities. DrivSafe is adding a new dimension to telematics programs by introducing smart phone mobile app that collects more information like geographies visited and cell phone use while driving to build a more comprehensive data set to access risk. DrivSafe can also help auto insurance companies with the most challenging part of building a telematics program by managing big data generated by telematics, deploying right analytical tools to model the information collected and converting this information into sound pricing program. For more information about DrivSafe, please contact us

Telematics - future of Auto Insurance Pricing


Information is the key to getting better at anything including pricing of auto insurance policies. Traditionally, auto insurance companies have been setting premiums based on socio-demographic profile (age, gender, education, occupation, home location etc.) and credit scores of an individual policy holder. In recent years, with the introduction of telematics systems, some insurance companies are also collecting information about individual's driving behavior and pricing the auto insurance policies based on individual's data. This personal driving behavior data greatly aligns premium with risk - i.e. lower premium with low risk drivers and higher premium with high risk drivers. This pricing advantage created by telematics over the traditional pricing is creating a need for other companies to get into the race or else face adverse selection. For example, Progressive has been experimenting with a plug-in based telematics system for a number of years now. The company’s Snapshot system has become the largest usage based insurance program in the industry with over 2 billion miles of data (over 2 million vehicles enrolled)*.

What’s more - a typical driver is excited to earn auto insurance discount and learning about their driving behavior (and potentially improve them). For the first time, Telematics based insurance pricing offers a chance for drivers to earn discounts - there was no such empowerment in the past.


Most insurance companies are currently using a data collection device (dongle) that a driver needs to plug in their car for the company to collect their driving data. However, auto insurance companies now have even better and more sophisticated technology over these plug-in based devices. Steering the technological evolution, DrivSafe has designed a smartphone based telematics system that can get the desired information to the insurance companies. The plug-in based devices are limited in their information collection (e.g. the devices do not capture cell phone use while driving, which is one of the major causes of auto accidents). DrivSafe smartphone based telematics system captures driver information on multiple dimensions like speed, distance travelled, time of travel, geographies visited and even use of cell-phone while driving. DrivSafe's expertise can also help auto insurance companies close the gap to early adopters by helping collect, analyze and develop telematics based auto insurance pricing plans. 

DrivSafe copyright: top US auto insurance companies with telematics program

BLOG

Auto Insurance – rainbow of savings…

It is a colorful world of ours - blue skies, green meadows, pink blossoms…We usually like our world to be perfect. Occasionally, however, clouds do appear casting a shadow in our perfect world. Insurance expenses may appear as one such cloud, even though this is supposed to be a buffer to counter emergency situations. No more getting bogged down! Here is rainbow of savings - through the clouds - that may help you save real dollars on your auto insurance bill ...


       Car type and features matter…

Buying a car? Some cars are more expensive to insure! This is generally because it is an expensive car, high performance car or a thief magnet car. Such cars are expensive to repair or replace and are thus more expensive to insure. 

Further, safety features matter! A number of safety features like airbags, antilock brakes, electronic traction control, seat belt, accident avoidance systems etc. may qualify you for significant savings.  Essentially, the safer the vehicle, the cheaper it is to insure...

It is a good idea to ask your insurance company to give you a quote for each of the vehicles you are considering, before making your final decision.
     


       Shopping around matters …

Just because your friend got a great deal with a company does not mean you will get one too! This may sound crazy but it is true. Auto insurance companies use your socio-demographic information (age, gender, credit, education, vehicle use etc.) to predict your chances of getting into an accident - higher your chances more you pay. However, it is like predicting the outcome of a sports tournament before the first game is played...different people (or companies) will predict different outcomes! 

Thus, it is always advisable to shop around. Most companies provide online quotes... further there are many comparison sites that provide online quotes from multiple companies. This takes more effort but you are likely to enjoy more savings. 

Once you narrow down the companies, it is generally a good idea to research the companies' financial ratings from A.M. Best or Standard & Poors and customer service and claims handling rating from consumer reports and J.D. Powers before making your final decision. After all you don't want a runaround if an accident occurs.


       Bumper member discounts….

Are you a member of a group such as a credit union, AAA, wholesale/ bulk stores or alumni associations? You may qualify for discounts from a number of auto insurance companies.


  • Some financial institutions partner with insurance companies and give discounts. Basic idea is that both institutions lower their costs by cross-selling products and pass on the savings to you. Thus, check with your bank or credit union for any such offers.
  • Groups like AAA have partnerships with many insurers to offer you discount on insurance.
  • Wholesale stores such as Costco, BJ's etc. provide member discounts on the insurance policy purchase.
  • Schools and companies may also have these types of offers.
  • Some insurance companies offer discounts to military personnel and their immediate family members (even if the family member does not live with the military personnel) so be sure to ask your insurance company


So check with any group you belong to and see if you can save money through them!
     


       Bundle and save …

The more you buy the more you save! This common rule applies to insurance buying too.
If you are looking for auto and home (or renters) insurance, it is worth inquiring about multi-product discount or bundling discount. Most insurance companies offer up to 5-20% discounts to policyholders who buy multiple policies from them. Thus, this common discount can save you significant money on both policies.


       Customize the policy to your needs …

Many people are over insured or under insured because they fail to customize their policy to their needs ... here are some ways to avoid paying for too much insurance:


  • Deductible: This is the amount you will need to pay on a claim before the insurance company pays anything. The more you are willing to pay out of pocket, smaller will be your insurance premium. Depending on how high you are willing to raise your deductible, your insurance premiums could be lowered by 10-20%. However, if you are going this route, it may be a good idea to set aside money to pay a higher deductible in case you need to file a claim.
  • Policy coverage: Some policy coverages cover your liability i.e. the amount you owe if you hurt someone or damage property while other coverages cover your own vehicle in case of an accident. You are legally required to buy coverage to cover your liability but generally not to cover your own vehicle. Thus, if you have an older vehicle, you may want to evaluate the need to purchase coverage like comprehensive or collision, especially if it costs more than the value of the car. Researching value of your car, and making sure you are not paying for insurance you may not benefit from can significantly lower your insurance bill.



       Accelerate good credit scores…

Most insurance companies use information on your credit report to determine your premium - this information can significantly influence your premium ... sometimes up to 40%. It is believed that drivers with good credit records tend to have fewer claims. Generally insurance companies focus on the consistency of paying bills, frequency of opening accounts, bankruptcies etc that exhibit good / bad behavior as opposed to overall debt levels. However, usage of the credit-data varies among different companies. Thus, regularly monitoring your credit report and learning ways to improve score can save you a lot of money.


       Safe driving discounts...

Many insurance companies offer discounts to safe drivers. Here are some ways to qualify for this discount.


  • Insurance companies generally use your driving record to determine premium - your rates are going to be high if you had accidents or traffic violations. Thus, driving carefully is essentially to getting this discount. Further, if you know that your accident / traffic violation may be falling off (different companies and/or states have different rules), ask your insurance company to give you a new quote or update your records.
  • Many companies give a discount if you complete a defensive driving course. This may save you 5-10% on your premium.
  • More and more companies are now offering "telematics" products to learn about your actual driving (to supplement the socio-demographic information discussed above). These companies give a small participation discount and a larger on-going discount (i.e. if your driving data exhibits safe driving habits). If you are a good driver or a don't drive lot of miles - this may be a good option for you to save up to 30% on auto insurance. 


Hope one or more of the seven ways help you save on your auto insurance and the rainbow of savings put a smile on your face.



DrivSafe is a pioneer in the telematics products for the insurance industry. It offers a patented smart phone based telematics system that monitors, analyzes and reports driving behavior. DrivSafe app is Free to download for personal use on your smart phones. Commercial users may contact us for more information.


Disclaimer: The information discussed above may not be used as advise. The discussed methods may or may not result in actual savings. DrivSafe, it's officers, employees or affiliates are not responsible for your actions including actions that do not result in savings or cause any other harm. Type your paragraph here.

Top canadian auto insurance companies with telematics program *: