In George Orwell’s 1984, all daily activities were overseen by a seemingly omnipotent being known as “Big Brother.” Telematics auto insurance seems like one step closer to “Big Brother” watching over us. Yet, on the other hand, telematics may also be the key to reducing the number of car crashes and also reducing our auto insurance premiums.
What Is Telematics?
Telematics involves satellites tracking a person’s driving habits — including the miles driven, the amount of time spent behind the wheel, as well as braking and acceleration patterns — to calculate a safe driving score. The score is then used to determine how much you should pay in auto insurance. While it may sound fanciful, this technology is already quite popular in Europe, as more and more drivers voluntarily agree to put this black box in their car to gain access to lower insurance rates. In America, companies like Progressive are just starting to offer this type of car insurance.
Is Telematics The Future Of Auto Insurance?
According to research firm Celent, the technology “radically reduces the frequency and severity of motor vehicle accidents,” so insurers see reduction in their revenue — from about 39 percent down to 13 percent. The firm adds that, in addition to telematics, it’s believed the next 10 years will hold more cars outfitted with collision avoidance equipment, more automated traffic law enforcement, and (to a lesser extent) robot cars.
Do People Really Save With Telematics Auto Insurance?
Drivers with a safety score of 4/5 save about 15 percent on their premiums, according to the UK website This Is Money. Those who score a 1 or 2 may wind up paying 20 percent more. Two-thirds of customers are estimated to save with reductions as high as £800 ($1,287).