Plug and play: Why implementing a telematics data insurance program may be easier than you think
With a little help from the pros, your telematics-based insurance program will go a long way.
Struggling to decide whether or not to adopt telematics-based insurance pricing? While it’s clear telematics pays off for insurers, many hesitate to implement a program due to a perception of high barriers to entry.
Telematics data provides more accurate rates than pricing based solely on age, gender, location, credit score, and other traditional determinants of driving risk. By utilizing mobility data tied to actual driving habits, such as hard braking, speeding, and average miles driven, you can identify the best drivers and attract and retain them by offering lower rates. And for high-risk drivers, insurers can more accurately price them to drive profitability.
It’s true that upfront telematics investment and internal buy-in can be tricky to secure. However, with a partner to help you overcome upfront costs, leadership buy-in challenges, and implementation challenges, telematics can be a plug-and-play solution for insurers.
Navigating upfront costs and buy-in challenges
Two of the biggest challenges when implementing telematics-based insurance are high investment costs and internal resistance to change.
- Upfront costs: Shifting to a telematics-based insurance program does require an upfront investment. But as insurers gain the ability to more accurately price drivers and target lower risk drivers, profitability, and scale of profitability increase.
- Internal & external resistance: From internal stakeholders to prospective customers, a certain amount of resistance may arise when adopting a telematics data program. Consumers may be concerned about data safety, integrity, and the duration of the monitoring period. Meanwhile, insurers may be concerned about internal hurdles like adapting to new technologies and financial challenges from overhead costs.
Overcome telematics hurdles with an expert partner
Although the telematics adoption process can be daunting, you don’t have to navigate it alone. Successful telematics-based insurance solutions require a partner that empowers you to engage and educate agents and customers. With an expert partner like Arity, you can gain:
- Agent buy-in: An expert partner can assist by providing educational materials to agents and offering other resources to help explain the value of a telematics program to potential customers.
- Instant risk assessment: Telematics-based pricing is typically delayed until after a customer signs up for a program and completes a set number of trips — which may dissuade customers from signing on. Using Arity IQ, insurers can instantly query and incorporate the actual driving risk of a customer at the time of quote. An insurance carrier simply provides information about a specific driver they wish to quote, and Arity provides a DOI-filed, FCRA-compliant driving score in return.
- Plug-and-play capabilities: Arity provides scores that identify relative risk above and beyond what is already considered in non-telematics rating plans, making it easy to layer on top of existing rating plans to deliver the best prediction of driving risk.
- Actuarial support: New models require significant actuarial support and back-and-forth communication with regulators in each state — which can add months to an implementation timeline. Insurers can reference Arity’s approved Drivesight 3.0 filings to shorten the overall integration process when shifting to a telematics program or a new scoring model.
Access the right tools with Arity
Change management is always difficult, but Arity works with your team to ensure you have the knowledge, skills, and tools to gain stakeholder buy-in and quickly stand up your program. Acquire the best drivers with tools like Arity IQ that offer accurate pricing based on driving behavior.
We are the only telematics provider with billions of miles of driving behavior data linked to actual claims data. Our team offers solutions to help you overcome telematics challenges and reap the advantages of behavior-based pricing.
Learn more about how Arity can help implement a telematics program.