Here’s a dirty little secret for you.  Insurance companies have historically priced auto policies based on less than perfect science.  I don’t mean to over simplify things — but, essentially, they look at your geographic and demographic variables.  Next, they sift through your driving records looking for rare and sporadic events (accidents and violations) as an indication of behavior.  Then they mash that data together and plot you on a scatter diagram.  Presto!  They give you a price for insurance.

Well all of that is about to change, because insurance companies can now use telematics technology in vehicles to reliably verify actual usage data such as, mileage driven, time of day, rapid acceleration, hard braking, and even location.  The premise is simple.  If they know how you drive, then they can give you a price that more accurately reflects your real world behavior.

While it’s been utilized in Europe for a number of years, Usage Based Insurance (UBI) is just beginning to gain momentum in the USA.  And next week in Chicago, leaders from the insurance and telematics industries will gather to explore opportunities to further accelerate UBI innovation to redefine how car insurance is offered.

But pricing innovation is only the beginning!  Indeed, telematics technology provides insurers with a powerful platform upon which numerous innovations can be delivered to improve driver safety and reduce costs.

For example, imagine if insurance companies could leverage the UBI telematics platform to automatically promote safe, legal and responsible use of mobile phones while driving.  Now, not only could insurance companies monitor human behavior as it relates to vehicular controls (gas pedal, brake pedal, steering wheel), but they could simultaneously eliminate the dangerous temptation to text while driving.

Here’s another secret for you.  The telematics-based solution to prevent distracted driving already exists.  I am excited to go to Chicago next week to share the news!