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Telematics Growing and Offering Smart City Benefits

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Usage-based Insurance

April 20, 2020—Telematics is not a totally new concept to the auto insurance world. But in the 2020 Crash Course Trends Report released by CCC, data shows that telematics can help reduce distracted driving, which, in turn, can lead to a lower claim cost.

CCC is a software-as-a-service provider of telematics, technologies and apps for the automotive, insurance and collision repair industries. The company has been releasing Crash Course reports for 25 years. The company's solutions and data insights are delivered through the CCC ONE platform, which connects over 350 insurers, 24,000 collision repair facilities, OEMs, parts suppliers and third-party data and service providers.

According to the report, early data from telematics providers revealed one of the major benefits of telematics was supported by the self-selection theory that those drivers that opted in were less accident prone due to being lower mileage drivers.

Telematics adoption is growing rapidly in commercial auto fleets as compared to personal vehicles. It's expected to increase by 20 million units in the next three years, up from 13 million today. The Crash Course report estimates that the annual accident rate for commercial fleets is around 20 percent, and the average loss related to fleet vehicle accidents is approximately $70,000.

 

Behind the Scenes: How Telematics Operates in the Vehicle

Electronic logging devices (ELDs) or automatic on-board recording devices (AORBDs) are placed in the car to record driving data.

At its simplest, usage-based insurance programs record miles driven, offering those who drive less, a lower rate, according to the Insurance Information Institute. Telematics devices relay information about when and how the car is being driven. Data is provided on distances driven, frequency of operation, braking and acceleration and driving patterns.

Not only does telematics help provide a driver's behavioral data to insurance companies, it can also be used in cars to measure collision accelerations. When used to detect collision accelerations, it detects accidents and other on-board data elements, according to the Crash Course report. Some automakers now offer these Advanced Automated Collision Notification Systems (AACN).

 

How Telematics Devices Are Installed in the Car

According to McKinsey & Company, here are four ways telematics devices can be installed in a car.

  1. Black box: This is professionally installed a vehicle's cabin and can also include additional sensors such as accelerometers. The most advanced black boxes feature an embedded microprocessor, a Bluetooth module for connectivity, a multiconstellation high-performance GNSS, and more.
  2. Windshield-mounted device: This device is also professionally installed on a vehicle's windshield. Some are available with a camera as well. 
  3. Battery line: The battery line connects to the car’s battery and to offboard systems via a SIM card.
  4. OBD device: Designed to plug into a car’s onboard diagnostic (OBD-II) port, the device taps into key vehicle electronic systems and transmits data via a built-in SIM card.

 

Telematics Enable the Future of Smart Cities

Telematics has other benefits, according to the McKinsey & Company report. The use of telematics can lead to traffic optimization and smart-city infrastructure.

A smart city is one that collects and analyzes data from sensors and cameras, according to Cisco. A city operator can take that information and decide how to use it to build the city.

As more people adopt telematics the benefits increase as a result of collective usage.  Data taken from vehicle telematics is then used by insurance companies and government agencies to determine traffic patterns and optimize urban infrastructure projects. 

Telematics can lead to smart cities because it offers the capability for real-time tracking, vehicle-finder services, vehicle-maintenance alerts, and routing.

 

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