When enhanced technology met motor vehicle performance, tracking and driver behaviour, telematics were born. In essence, therefore, telematics involves the use of in-car technology to monitor and improve the efficiency of a vehicle’s performance and the way in which it is driven. Not surprisingly, it is also known as “black box” technology.
Through the installation of a small but powerful piece of electronic gadgetry, telematics brings a number of valuable benefits to the owner or operator of the vehicle and typically includes:
- continuous tracking of the vehicle;
- monitoring driver behaviour – which the RAC points out, may help to improve safer driving habits and identify any driver training needs;
- monitoring the hours of day during which the vehicle is being driven;
- greater fuel efficiency and the consequent reduction in motoring costs; and
- for business users, a defence against unauthorised usage of the vehicle and the ability separately to identify business and private mileage.
From these possible uses of telematics it may be easy to see the benefits such technology may bring:
- for commercial users and operators of haulage fleets, for example, there is a clear business case for the cost efficiencies telematics offer through the simple installation of a black box in the driver’s cab;
- a further interesting application of the technology, moreover, applies to private car owners and the calculation and monitoring of insurance risks in particular.
Telematics and insurance
If it is possible to monitor such real time factors as the driver’s behaviour and the extent to which safer habits are upheld, this also helps to evaluate some of the risks in insuring the car.
This may be especially useful when it comes to evaluating the risks of insuring younger or inexperienced drivers. Since one of the important conditions sometimes attached to cover for such drivers is a curfew on use of the car after a certain time in the evening or at night, telematics is able to record whether curfew hours are being kept.
Closer monitoring of driving safety and hours of use may enable some insurers to offer cover to younger drivers which might otherwise be denied or attract an unacceptably high premium rate.
Telematics based motor insurance such as this is in its relative infancy. But the ability to assess risks more effectively is something that at GSI Insurance we welcome – not least because it offers a more accurate, evidence-based assessment of actual risks, rather than the risks conventionally assumed by insurers.
Our black box insurance system is one of the simplest on the market and is aimed mainly at 17 and 18 year-olds who hold either a provisional or full driving licence. What makes the system especially simple is that it is based on the insured not driving from eleven o’clock at night until five o’clock in the morning. If the black box records the car having been driven by the insured between those hours, a penalty charge is incurred each on each occasion.
The black box, however, still allows the insured vehicle to be used by qualified named drivers at any time of the day.
The system will monitor your driving during the first year, and your renewal will be calculated based on the number of miles you cover, your average speeds and the types of roads you drive on.
This allows for the more careful younger driver to achieve as much as a 40% discount on their second year.