One of the mainstays of actuarial education is thinking about the ways one might underwrite auto liability insurance. The most accurate predictor of risk should be miles driven; after all, the more you’re on the road, the more likely you’re going to get into an accident.
The problem with calculating the number of miles driven is that it’s simply impractical. You’d need an insurance company to install a mileage monitor in every car, scoffs the textbook, and that’s just too costly to do. Some day, perhaps…
Well well well, the day has arrived!
Telematics insurance relies on a databox the size of a mobile phone which is installed by the insurance company into your car. The box does not damage the car and will not affect the warranty; it uses less energy than a car radio so should not drain your car battery.
What Data Is Collected?
Data from this box is collected by GPS, enabling insurers to monitor:
- The distance it travels at those times
- Where the car is located
- On what type of roads the car travels
- Speed of travel
- Braking behaviour of the driver
- Direction and speed of travel before and after a collision
- Force of impact in a collision
- At what times the car is used