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5 ways automatic traffic updates can reward insurers and policyholders

Financial Services Writer

Driving is a risky, yet necessary form of transportation. According to the National Highway Traffic Safety Administration (NHTSA), more than 2 million motor vehicle accidents occur every year, and 94 percent of them are the driver's fault. Technologies that give drivers automatic traffic updates have the potential to significantly reduce these risks, and insurers that capitalize on this type of technology can create a competitive advantage over other carriers.

The following are five ways that guiding drivers with real-time traffic data can lead to fewer claims for insurers and lower premiums for policyholders.

1. Get people off the road faster

The average driver spends 42 hours a year sitting in traffic, according to the Texas A&M University 2015 Urban Mobility Scorecard, and the more time people spend idling in gridlock, the more time they have to potentially get in an accident.

Automatic traffic updates, however, can reroute drivers to less congested streets and get them to their destinations sooner. The less time policyholders spend driving, the less time they have to get in accidents that could cost insurers thousands of dollars. Delivering insights from analytics advising drivers on congested areas to avoid can help satisfy policyholders, keep them safe and avoid costly payouts.

2. Slow down speeders

Speed is a factor in 29 percent of fatal car crashes, according to the NHTSA, and contrary to what many people might think, 88 percent of speed-related fatalities occur on non-interstate roads. The risks related to speed also increase during inclement weather.

Automatic traffic updates can highlight road conditions and areas where drivers are likely to speed. This insurance business intelligence provides insurers with more data and more opportunities to encourage policyholders to take extra precautions, which in turn can reduce the chances of costly accidents.

3. Keep drivers away from orange cones

Construction zones also increase the risk of accidents. The lanes are usually narrow, the traffic patterns are different and the construction vehicles and workers are moving around unpredictably. The California Department of Transportation noted that more than 40,000 motorists and highway workers are injured every year in work zone crashes. Steering drivers away from work zones can instantly reduce the risk of expensive claims.

4. Avoid road rage

Some people don't handle driving-related stress well, especially when they're racing the clock. For this reason, it's no surprise that 37 percent of people have watched other drivers cut into a funeral line, more than half have seen able-bodied drivers take handicapped-accessible parking spots and 42 percent have seen other drivers cut in front of a school bus, according to a Safeco Insurance study on aggressive driving.

By using automatic traffic updates to steer people away from rage-inducing scenarios like school zones and congested streets, insurers can reduce the chances that their policyholders will be involved in an incident.

5. Deliver products and services faster and more safely

According to ABI Research, telematics will power more than 73 million commercial vehicles by 2020. That means corporate policyholders can monitor service vehicles and their drivers remotely, as well as provide optimized routing and navigation. That information, including automatic traffic updates, can help delivery-service providers move workers to safer, more efficient routes and reduce the chances of costly accidents. The technology can also help insurers save money by lowering workers' compensation claims related to traffic accidents.

Getting policyholders home smoothly can have a more substantial impact than simply making them happier and saving them time. Automatic traffic updates can create a win-win situation for both policyholders and insurers by reducing the number of accidents and the cost of payouts. Explore the ways that your insurance company can benefit from insurance analytics in a complimentary and customized workshop.