A new report provides an in – depth analysis of the insurance telematics market, and sets out a roadmap for businesses to follow to achieve optimal growth and development targets.
According to the Oxford dictionary telematics is defined as a branch of information technology that deals with the long – distance transmission of computerized information – essentially seen as the intersection between telecommunications and informatics.
Telematics has been pioneered in the auto insurance industry through niche products targeting high risk drivers like young motorists. Although it was originally intended to be an experimental endeavor its popularity from 2009 – 2013 saw it soar into the mainstream of the motor insurance business.
It has been praised not only by consumers for placing the premium pricing directly in their hands, but also by government entities and vehicle manufacturers for its innovative aspects. Insurance telematics is widely regarded as the future of motor insurance.
Despite its growing popularity insurance telematics is still a relatively new concept. The study analyzes the market leaders – the United States, United Kingdom, and Italy – as the primary adopters of the telematics products. Surprisingly, Italy is the current leader in telematics operations with a penetration rate of approximately 4 % at the end of 2013.
Considering the highest market penetration for any country is at 4 %, there is a considerable amount of growth potential. The estimated global sale of insurance telematics products increased to 4.5 million as of December 2013, with an estimated market size of US$4 billion in terms of gross written premium.
With that being said, global sales of insurance telematics products are projected to grow at a CAGR of 80.20 % over 2013–2018, and the subscriber base is expected to reach 85.5 million in 2018.
Initial growth in the insurance telematics market will be mostly driven by price discount models. However, with growth in the market and mass adoption of insurance telematics over 2013–2018, price discounts will no longer be helpful in differentiating insurance telematics products.
In countries where premium rates and profit margins are low, insurers will not be able to offer great discounts on usage-based insurance products. Insurers are expected to offer telematics-based value-added services for a minimal fee, or free of charge, to attract customers and differentiate products from those of their competitors.
A link to the full report can be found here