Telematics is frequently touted as the future of car insurance by insiders, particularly for younger drivers who face high premiums because of their risky reputation. But despite signs of growth, it hasn’t been completely embraced by the mainstream yet.
However, an expert at Gocompare.com has predicted that the vast majority of car insurance policies will be telematics based within 10 years, and that drivers may actually have to pay more if they want to opt for a more traditional sort of cover.
Speaking at a British Insurers Brokers’ Association (BIBA) seminar in Manchester, Gocompare.com’s head of insight, Tom Lewis, said: “In 10 years' time there will still be customers who prefer not to have a telematics device installed, but it will be an opt-out situation, rather than an opt-in. There will be reasons for people opting out – perhaps because they are bad drivers, or unhappy with the privacy element, or have an old car. But they will have to accept a higher premium to insure their car."
Telematics car insurance policies have traditionally relied on a ‘black box’ being installed in a car, but now providers are offering DIY options which use mobile phones to track a car’s location, speed and braking. In addition, by October 2015 all new cars in the European Union will have to be fitted with a black box system called eCall, which helps emergency services locate vehicles in the event of a crash.
According to BIBA, there has been a 60% increase in the uptake of telematics-based policies since 2012. For younger drivers, telematics can potentially offer big savings if they drive safely and/or outside peak times. Savings for older drivers tend to be far less pronounced, although motorists of any age could potentially benefit from a telematics policy. However, there is a big trade-off to be made with regards to privacy, and some policies even punish drivers for using their car between 05:00 and 23:00, when accidents are most likely to occur.