With car insurance set to increase to an average premium of £1,000 in 2018, drivers will be looking to shop around to reduce their premiums and minimise the rise in costs.
Today, insurance premiums are selected based on a series of criteria, such as the car model, driver age, address and driver history. This method can lead to unfair profiling of certain groups of drivers, especially young people who are traditionally perceived as vulnerable or reckless road users. With this comes an increased cost of premiums for those groups.
The no-claims bonus has historically been key to keeping premiums low but the recent rises have been universal. This has seen a trend in more drivers adopting telematics policies so they can benefit from an initial saving and further reductions, by driving safely.
This rise in blackbox insurance is set to increase rapidly in 2018 across drivers of all ages. The technology allows insurers to accurately and fairly calculate premiums based on each individual’s personal driving history, as recorded by the box rather than chosen based on factors such as age and postcode.
The insurance industry needs to address the rising cost of insurance in 2018 and with accelerating advancements in the insurtech space, there are many new opportunities opening up to car insurance companies, which can more accurately calculate risk and streamline claims processes – leading to lower premiums and, ultimately, happier customers.
Some insurtech innovators are creating solutions to the challenges presented by modern insurance. Not only are fewer young people driving, but the nature of driving is also changing and will continue to evolve in 2018. As with the rise of public bicycles, new services such as car-sharing schemes (such as ZipCar) mean that people don’t necessarily want or need annual car insurance, and would rather opt for flexible insurance products that can offer them same-day daily or even hourly coverage (such as Cuvva).
Insurtech is set to continue shaping the industry in 2018, with options such as paying by the mile (Metromile), and the shareconomy approach (Friendsurance) allowing for crowd-sourced car insurances that offer moneyback schemes if no claims are made.
Insure Telematics Solutions (ITS) is an insurtech company at the forefront of this industry shift, as it offers driver data on acceleration, cornering, speeding and GPS location to help calculate a driver’s premium. ITS goes one step further, however, with its innovative crash algorithm, and incident report features. This determines the exact cause and force of the crash, and compiles a comprehensive report that includes the severity of the crash, speeds involved, damage areas and location data.
Adam Gooch, commercial director of ITS, believes telematics is the foundation of future car insurance claims.
He explains: “With premiums increasing year on year, car insurance could become more unaffordable to the average driver. Insurance companies need to continue to be proactive and forward thinking. 2018 is going to be an exciting year, as I believe the industry will really start embracing current technologies to ensure that car insurance and driving remain accessible to everyone.”