New statistics out of the United Kingdom show how the use of telematics technology can help young drivers get improved auto insurance premiums. Telematics are being used increasingly by insurance providers and it is thought they can help under 25s get more affordable coverage, including in Canada where the technology is starting to be adopted.
Young drivers pay among the highest premiums for auto insurance, with the average price sometimes as much as 47 per cent higher than a normal policy. Insurers cover themselves because drivers aged between 16 and 24 years old are a higher risk, causing 24 per cent of all fatal auto accidents while only covering 13 per cent of all drivers in Ontario.
However, in the United Kingdom telematics technology is being used more and it is resulting in young drivers reducing their average premiums. Telematics act as a black box of sorts and let an insurance provider track a vehicle via GPS to see how it is driven, how much, and how fast. Young drivers in the UK who have adopted telematics in their vehicles are now paying 5.5 per cent less for their premiums, on average.
The cheapest insurance on the market overall now comes from vehicles with telematics devices and since 2013 there has been a 20 per cent drop in premiums across the auto insurance industry. Consumer Intelligence, the company behind the study pointed out:
"Younger drivers are seeing the benefits of the innovation in the market such as black box policies and that is reversing the massive increases seen at the turn of the decade."
Telematics are still not quite as popular in Canada, but the technology is slowly making its presence felt and could help young drivers in Ontario to have more affordable premiums. Young drivers will still pay the highest premiums due to other risk factors insurers take into account, but telematics could at least help to ease the financial burden on the 16-24 demographic.
However, telematics are not universally accepted as a viable way to reduce premiums as many groups disagree with their use as monitoring devices. Insurance companies have different criteria as to what constitutes good driving, so merely having a telematics device may not be enough. Drivers are urged to read the small print on their insurance policy to see what benefits they have by getting a telematics device in their car.
Telematics may just be the start of in-car monitoring systems with AllState Insurance among the first to patent a device that would not only record driving habits, but would also place a video feed and microphone audio in a vehicle.