Hughes Telematics to Supply Towers Watson with Data for UBI Programs

By Frank Griffin
TMCnet Contributing Writer

The insurance industry is going through a revolution in how they price insurance premiums for drivers. In the past it was mostly based on where you lived and if your zip code was in the right location your rate was generally lower. This of course didn’t make the people living in the wrong zip code very happy.

The introduction of telematics and usage-based insurance (UBI) levels the playing field so the only criteria for your premium becomes how you drive. Towers Watson and Hughes (News - Alert) Telematics have entered into a partnership to use driving data for metrics to be used for new insurance products and services.

Hughes Telemetrics collects wireless services from a vehicle so it can be tailored to any platform. The data it collects can be used for many different applications and insurance companies use it to assess the driving behavior of the car owner.

Some of the information it collects includes:

• Acceleration / Deceleration
• Cornering
• Driver Behavior Tips
• Miles Driven, Idle Time, Total Trips
• Speed, Average and Top speed

The aggregation of this type of data gives insurance companies the ability to weigh their risk on the driver. It gives them the option of increasing the premium or denying the driver insurance because he or she is not worth the risk.

“This alliance will leverage HTI’s strength in automotive telematics and Towers Watson’s analytical expertise to deliver cost-effective UBI data services for the automobile insurance industry,” said Kevin Link, senior vice president, Hughes Telematics Inc.

Tower Watson is a service company that helps improve performance, risk and financial management for many industries around the world. It provides solutions in talent management, risk and capital management and rewards.

Said Robin Harbage, leader of Towers Watson’s UBI consulting practice: “An effective UBI program should offer valuable vehicle services, as well as the ability to reward dependable drivers, working together, Towers Watson and Hughes Telematics bring extensive knowledge to help insurers determine how to best implement a UBI program.”

The application of UBI is a recent innovation and the advancement of telematics has made it possible to implement this type of policy more effectively. The advantage of UBI programs is it allows the consumer to get a policy based on their driving behavior. It also enables the driver to monitor how they drive and implement behavior that will lower the premium.

The advantage for the insurance company is that it can gather data before an accident and determine speed, time, hard breaking and other factors to see if the damage sustained in the accident corresponds with the data.

It can be used to track stolen cars, help during emergencies and offer roadside services as well.

The challenge with UBI and telematics is the privacy issue, and most people don’t want to be tracked, no matter how benign the process. To overcome this concern, some states have enacted legislation to require insurance companies to submit the equipment they use for the tracking and how the practice is applied.

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