New analysis of the latest UK road casualty statistics* we conducted at LexisNexis Risk Solutions has begun to uncover compelling evidence of the role telematics insurance has played in cutting claims costs for insurers amongst the youngest, most vulnerable drivers, by helping to reduce accidents by over a third since 2011.
Car casualty rates amongst 17-19 year old drivers have fallen by 35.3%, compared to 16.2% 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, equivalent to 975,000 live policies, out of over one million 17-19 year old drivers.
This is the first time road casualty statistics have been analysed in direct relation to the exponential growth in telematics policies since 2011 with 750,000 live polices in 2016 rising to 975,000 in 2017, suggesting telematics insurance has done more to cut accident risk than other road safety initiatives aimed at the young driver market.
The significant 35% reduction in road casualty rates is despite the 10% increase in the number of vehicles on the road (2011 to 2016) and the increase in the number of registered drivers of all ages, up 2%.
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.
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 whilst 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.
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.
At the same time our research shows that consumer confidence in telematics and willingness to use this type of insurance has jumped by 136% since 2013.
Innovative insurers and brokers are already focusing on new products and data collection solutions with advances in technology to track driving behaviour such as the 12V self-install device, and white label off the shelf mobile applications enabling speed to market. This has made it possible to offer telematics insurance at a very low cost for the whole driving population.
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.
*Analysis of Department for Transport, Road Safety Data, November 2018.
For more research on this subject download our white paper The Social Benefits of Telematics-The Role Telematics Plays in Reducing Road Casualties.
Follow the link to the LexisNexis Risk Solutions website to find out more about how we support insurers.
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