Over the last several decades the Insurance industry has experienced unprecedented change. Both the regulatory landscape and competitive positioning have transformed much of the business, pressuring profit margins, and otherwise introducing a commodity-like element to an inherently service-based business.  While the Agency-based business model continues to add significant value vs. direct providers, the last decade has ushered in another series of transformative developments. Principle among them....self-driving vehicles, GPS tracking devices, Uber, Lyft, etc. The advent and increased use of these and other technology-based developments, among them Telematics, is at the forefront when it comes to understanding the future of car insurance and its impact on your insurance costs.  While much of the long-term view continues to evolve, what is clear is that these developments will undoubtedly have a significant impact on the insurance industry and the costs to consumers.

In trying to understand any increase in insurance costs in recent years, one needs to look no further than distracted driving (i.e., texting and driving !) and the rising costs to repair vehicles that have become increasingly more sophisticated (i.e., cameras, sensors, etc.). These 2 factors have quickly become major contributors to the increasing cost of Insurance. Yet many of us who have accidents infrequently may still see costs increase. And as a safe driver that may have few, if any accidents, it can be frustrating to have to pay more. Or perhaps even f you feel your insurance is priced fairly, what if you could pay even less ? Well, there is an answer for that.

In somewhat brilliant fashion, Telematics has helped Insurance companies introduce ways to help alleviate costs for customers. Most major insurance companies now have Apps that allow them to collect data related to the driving habits and characteristics on an individualized basis. So if you take the train or the bus to work and mostly use your car on weekends, your insurance costs can reflect that. Similarly, if you're retired, and perhaps just drivel locally or during less-traveled hours in the day, your insurance costs no longer have to reflect that you may be commuting to work during busy times when many accidents occur. Also, if you can demonstrate on a consistent basis that you do not speed, hard-brake, or drive at certain times that may be deemed more prone to accidents your insurance can be priced accordingly.

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Some critics argue there may be privacy-related issues to consider and that can be a valid point. Others may argue that there is already enough technology loaded on smart devices that data is already being collected so why not at least put yourself in position to benefit financially when you can. However, what's becoming more apparent is that like it or not, the insurance industry appears to be moving in the direction of rating drivers on an individualized basis, which is actually good for many of us that feel we already drive in a safe manner. Many customers, especially Millennials who are generally more accepting of the technology, have already began to benefit financially. 

Beow Ive included a short write-up on Telematics. Please feel free to contact me to discuss whether this is right for you and your family.

Below published by Allstate Insurance:December 2018

Telematics is a method used to collect information about your driving habits. Insurers may use telematics data to offer personalized driving feedback and safe-driving rewards or discounts on your car insurance policy. Telematics may also come into play if your insurer offers usage-based insurance policies (sometimes called "pay-per-mile insurance").

Telematics data may be captured by a mobile app. In other cases, your insurance company may provide a small telematics device that you can plug into your vehicle's onboard diagnostic port (OBD-II port), which is usually located under your dashboard. Vehicles produced since 1996 typically have this port.

After you've enabled a telematics app or device, it will start recording information about your driving behavior, which it usually sends to your insurance provider over wireless phone networks.

If you're exploring your insurer's telematics program, these are three potential benefits:

Personalized Driving Feedback

Telematics data may provide useful information about your driving habits. For instance, it may record the number of miles you drive, your speed, and how quickly you brake. These systems may also analyze the time of day when you drive. Some insurers' programs allow you to go online or use a safe driving app to track the data your telematics device collects about your driving habits. This data may help you become more aware of your driving habits which can help you learn what you need to do to become a safer driver.

Safe-Driving Rewards

If you enroll in a telematics program with your insurer, then you agree to allow the device or app to send this information to your insurance company. In some cases, if the data shows you practice safe driving, you may become eligible for car insurance discounts or earn rewards for being a safe driver. For instance, drivers may be rewarded for avoiding risks such as hard stops, traveling late at night and driving at high speeds.

Usage-Based Insurance

Telematics can also provide different options on how you use and pay for your insurance, including programs that allow you to pay per mile. If you opt into this kind of program, your insurer may provide a device that you plug into your car to track the miles you drive. You may be charged a daily rate and a per-mile rate for each mile you drive. Your insurer may allow you to review your trips and daily costs via a mobile app or website.

If you have safe driving habits, a telematics device may be one way to help you earn savings — and become a better driver. Contact a local agent to learn whether your insurer offers a telematics program in your area.