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How Telematics Solutions are Transforming Vehicle Insurance Policy in India
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With everything around us being driven by technology, why should insurance be any exception? The Indian insurance sector is soon catching up with telematics solutions to provide accurate premium rates to different car owners. Let’s learn more about it and how it works in this blog.
Every car owner in India is mandated by law to purchase car insurance before they can start using their vehicle on the road. This is of course done in the safety and interest of the owner and driver of the car. Now, while buying a car insurance policy, your insurer offers you a certain premium rate that you’re required to pay on a regular basis. In return, the insurance company provides you the benefit of financial protection against any damage caused to the vehicle or injury caused to you.
While these premium rates are nearly standard (with slight variations from one insurer to another), the insurance industry in India is soon catching pace with technological innovations to reform this trend. Telematics solutions are a positive step in this direction. Here we discuss in detail what telematics means and how it can be useful to a policyholder in terms of car insurance premium.
What Does Telematics Solution Mean?
In literal terms, telematics refers to that part of computing technology that facilitates transfer of digital data and information over long distances. This modern technology is now being adapted by the insurance sector across the world, with India soon catching pace as well. Insurance companies are using telematics solutions to digitally track and monitor the route taken by a vehicle (by way of GPS devices) as well as the distance traveled.
In addition, with the help of telematics, the mileage of a car and the condition of its engine can also be accurately determined. With the help of this data, insurers can then decide premium rates for car insurance policyholders based on the total distance covered by their car. It is by far regarded as one of the most accurate measures of determining premiums for vehicle insurance.
How Does Telematics Solutions Work for the Car Insurance Industry?
With regard to car or motor insurance, telematics solutions is often referred to as usage-based insurance. This simply implies that insurance premiums payable by car owners would be directly proportional to the usage of their respective cars, i.e., the distance traveled by the vehicle.
This is a more accurate way of finding out premium rates for different car owners and is being considered as a welcome move by a lot of car insurance policyholders. In order to determine the exact usage of the car and its components, insurance companies make use of digital tracking and monitoring devices called telematics devices. They are installed in the car to record readings of the total distance covered, the route taken, the pattern of driving followed, and more.
In some cases, the insurer may install GPS trackers in place of a telematics device (which tends to serve the same purpose). Alternatively, policyholders can also be asked to download a mobile app that helps track the movement of the car.
Based on the readings collected, the insurance company can then decide on an insurance slab for the car owner or policyholder. Note that since the premium rate is directly in proportion to the car’s total distance covered, any increase in the said distance (mentioned in the policy) would require the policyholder to upgrade the insurance policy to one which has a higher distance limit.
4 Advantages of Using Telematics for Car Insurance
Adapting to newer and more advanced technological trends is always in favor of anyone who uses it. The same rule applies to the insurance sector as well where telematics is fast picking up. These digital solutions have several benefits not just for the insured but also the insurer. Let’s look at some of them here.
Telematics is particularly advantageous to policyholders since it allows them to pay only as much premium as is proportional to their car usage. This helps them save a considerable amount of money.
It is highly convenient to the car owner as well. In case their car exceeds the distance traveled as mentioned in the policy, the owner can immediately recharge the insurance plan to reset the distance limit, or upgrade the plan to one that offers a higher limit of distance.
Since telematics helps keep tabs on continuous movements of the car, the car owner is prompted to avoid rash driving and, in turn, accidents. This means lower chances of insurance coverage to be provided by the insurance company.
Some policyholders may also stand a chance to be rewarded by the car insurance company in the form of additional premium discounts for careful driving. This is made possible by an analysis of the car owner’s driving pattern through a telematics device.
How Telematics Solutions are Soon Reforming Vehicle Insurance in India?
Telematics seems to be one of the best things that has happened in the insurance sector, holding several benefits both for the policyholders and the insurer (as detailed above). With the introduction of telematics, the motor insurance industry seems to be progressing towards a complete transformation in the following ways:
Premium rate calculation has become more accurate due to the telematics solutions technology in car insurance.
Lower premiums are offered to car owners who drive carefully, thereby encouraging more policyholders to drive safely and avoid accidents.
This also means higher premiums for people who drive rashly.
Telematics has brought in a fair system for all car owners, ensuring that those who follow responsible driving patterns are not obligated to pay higher premium rates or suffer due to the negligence of others.
Author Bio
Paybima Team
Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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