Traditionally, insurers have looked at risks only once, usually when the policy is created, and they revisit it either annually or after an incident. This leaves large gaps where insurers miss out on key changes and evolving risks. But with the rise of telematics and IoT technology, there's now an opportunity to bring insurance into a more connected, real-time approach, delivering better results for everyone involved.
Telematics allows insurers to tap into live data. It’s not just about upgrading to new tech—it's about fundamentally changing the way insurers handle risk, set pricing and support customers throughout the lifecycle of a policy.
Moving from traditional models to a more connected insurance ecosystem
In the old model, insurers assess risk at the start of a policy, and once that's done, they typically wait until the next cycle or a loss event to reassess. This method relies on outdated information and forces insurers to make decisions based on data that might no longer be relevant. This inefficient static approach often leads to incorrect pricing and poor risk management.
On the other hand, telematics and connected devices are creating a wealth of data that insurers can use to make real-time adjustments. Imagine being able to see how risks evolve continuously and making changes as things happen. Insurers can use this data to shift from outdated assessments to dynamic, real-time risk management, leading to better outcomes for their customers and their businesses.
How telematics improves business outcomes
Telematics allows insurers to work in a connected ecosystem where multiple players—carriers, customers, service providers and more—are linked through shared data. This makes decision-making faster and more accurate. Here's how it works:
| Stakeholders | Loss mitigation | Claims | Risk assessment and pricing | Query and Reporting |
|---|---|---|---|---|
| Carrier teams |
IoT Sensor and devices for alerts, preventive and predictive Maintenance – Focus on reducing claim frequency and Severity Additional insight for mitigation |
Automated FNOL and assessments using analytics on IoT Data Claim processing and settlement |
Risk profiling, continuous underwriting, Peer comparisons, Pricing optimization Advanced Analytics on IoT data |
Dashboards Query Reporting Audit Support |
| Commercial customers |
IoT sensor and devices for alerts, preventive and predictive Maintenance – Focus on reducing claim frequency and Severity Specific service needs around improving safety, reducing claims |
Automated FNOL |
Asset value preservation Insurance Premium reduction |
|
| Service partners |
Services based on maintenance and safety needs Data Masking for privacy |
Assessment Services Recovery and Remediation services Data Masking for Privacy |
Safety gaps remediation services Data Masking for Privacy |
|
| Other carriers (limited based on niche coverages and/or GEOs) Distributors | IoT sensor and devices for alerts, preventive and predictive Maintenance |
Automated FNOL and assessments using analytics on IoT Data Claim settlement |
Risk profiling, continuous underwriting, Peer comparisons, Pricing optimization Advanced Analytics on IoT data |
- Preventing losses before they happen: Using connected devices like IoT sensors, insurers can receive alerts about potential problems before they escalate into claims. For instance, predictive maintenance might show that equipment needs repair, helping customers fix the issue before it turns into a more expensive claim. This benefits commercial clients by keeping their operations running smoothly and helps insurers by lowering claim frequency.
- Streamlining claims processing: Claims management is often slow and manual, but telematics can speed it up. With automated First Notice of Loss (FNOL), claims can be reported and processed faster using real-time data. This not only improves customer satisfaction but also cuts down on the time and costs involved in handling claims. Plus, it helps insurers spot fraud early, reducing the chances of false claims slipping through.
- Dynamic risk assessment and pricing: Telematics allows insurers to continuously monitor risk and adjust pricing based on up-to-the-minute information. Instead of waiting for annual reviews, insurers can adjust premiums in real-time, making sure they reflect actual risk. This makes pricing fairer for everyone—low-risk customers aren’t overpaying, and higher-risk clients are charged appropriately based on their behavior.
- Better data for better decisions: The real power of telematics is in the data it provides. Insurers can use advanced analytics and dashboards to make smarter decisions. Whether it’s identifying patterns, solving problems quickly, or providing more personalized customer service, the data helps insurers stay ahead of the curve.
Tackling long-standing insurance challenges with telematics
Telematics helps solve many of the challenges insurers have faced for years. Traditional models are reactive and leave insurers playing catch-up with evolving risks. By using real-time data, telematics allows insurers to shift to a more proactive approach.
In the past, insurers often mispriced risk because they had to rely on old data. Now, with telematics, they can adjust pricing based on what’s actually happening in real time, making premiums much more accurate. Similarly, claims that used to take weeks to process can now be handled quickly, with automation handling many of the time-consuming tasks.
Achieving better outcomes with a telematics-driven approach
Embracing telematics opens the door to better business outcomes for insurers, allowing them to:
- Improve risk selection: Real-time data allows insurers to make better decisions about which risks underwriting. This ensures they’re pricing policies accurately right from the start, reducing the chance of taking on high-risk customers without the right premiums in place.
- Offer dynamic pricing: With telematics, insurers can adjust pricing regularly based on real-time risk data. This keeps premiums fair for everyone—customers who pose a low risk aren’t overcharged and those with higher risks pay premiums that reflect their behavior.
- Provide proactive service: Insurers can use telematics to help customers avoid losses before they happen. For example, sensors can alert a business owner to equipment problems before they cause downtime or lead to expensive repairs. This not only saves the customer money but also reduces the number of claims insurers have to handle.
- Prevent losses: Telematics empowers insurers to prevent losses in real time. Whether it’s tracking driving behavior or monitoring equipment, insurers can see risks as they develop and intervene before a claim occurs. This is a game-changer in reducing claims and improving the bottom line.
Moving insurance into the future
Telematics is pushing the insurance industry towards a future that’s more connected, proactive and data driven. Instead of reacting to problems after they happen, insurers can now prevent them from occurring in the first place. By embracing this shift, insurers can solve long-standing challenges, deliver better outcomes for their customers and remain competitive in a fast-changing market.
The time to embrace telematics is now. Insurers who adopt these technologies will be the ones setting new standards for efficiency, customer service and profitability. It’s not just about upgrading—it’s about creating a smarter, more responsive way to handle insurance for the future.
