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5 ways to leverage telematics for insurance

Social Business Manager, IBM

The Internet of Things is providing organizations with new opportunities to expand their business offerings, grow and retain valuable customers and improve existing processes to increase efficiency and reduce costs. With an estimated 24 billion connected devices by 2020, the Internet of Things cannot be ignored. Discover how to leverage the integration of telematics and big data and analytics in insurance to gain a competitive advantage.

  1. Introduce pay-how-you drive offerings

Insurance companies that implement telematics with big data and analytics are able to personalize vehicle insurance policies with rates and discounts based on real-time driving data placed in context. For example, combining weather and geolocation data with a policyholder’s driving telematics information provides a comprehensive view of a driving situation. Consider the following example from the white paper Telematics for Insurance:

“For example, perhaps a telematics report shows that a car’s wheels are spinning but the vehicle is not moving. With a traditional UBI program, a driver would not see a discount for safe driving based on the vehicle data alone. But by running real-time analytics on the vehicle data in conjunction with weather and geolocation data sources, the insurer can see that at the time the wheels were spinning, conditions were icy and the car was actually in the policyholder’s driveway—showing that the driver was merely trying to get their car moving in the morning.”

  1. Launch geo-fencing services to make sure drivers stay within defined boundaries5 ways to leverage telematics for insurance

By leveraging a combination of telematics and big data and analytics, insurance companies can utilize geo-fencing services in order to promote safe driving and create new business opportunities with add-on coverage opportunities. Consider the following example from the white paper Telematics for Insurance:

“For example, a parent of a young driver—or the adult child of an elderly driver—can use geo-fencing to make sure the driver stays within particular geographic boundaries… If the driver goes beyond a defined boundary, the vehicle displays an alert on the car’s dashboard screen and the designated contact receives an alert on a mobile device through a smartphone app. By enhancing location information with other data, such as traffic conditions and road maintenance information, insurance companies can help those receiving the alerts better understand any extenuating circumstances.”                         

  1. Optimize the performance of commercial drivers

Managers of delivery services or commercial fleets can also leverage geo-fencing to reduce costs and risk. For example, with the integration of telematics and big data analytics capabilities, managers can:

  • Identify the most efficient routes, which speeds up driving tasks and reduces fuel costs
  • Receive alerts for late deliveries, with the context surrounding the situation
  • Prevent unauthorized activity from drivers, including driving into heavy crime areas and endangering assets
  1. Present cross-sell and up-sell opportunities to policyholders

Insurance companies can utilize geo-fencing capabilities to present offers to policyholders when they leave the area in which they have coverage, ensuring that they have coverage at all times.

 “For example, an insurance company can send an automated alert when a policyholder crosses an international border, notifying the policyholder that he or she does not have coverage for that new country. As part of that alert, the insurer could integrate an offer for international coverage.”

  1. Initiate value-added services that improve interactions with policyholders

By utilizing telematics with corresponding big data and analytics, insurance companies can provide the first notice of loss (FNOL). Insurance companies are able to immediately analyze data regarding brakes, seat belts, air bags and more to predict the severity of an automobile accident. Then, insurance companies can initiate value-added services such as:

  • Calling emergency personnel
  • Contacting a towing service
  • Reserving and delivering a rental car to the scene of the accident (for consumers)
  • Sending a replacement fleet vehicle (for commercial operations)

Learn more about creating new business models and improving customer engagement with telematics data.