Fred C Church

Personal and business auto insurance providers may increasingly turn to telematics as a tool for evaluating coverage needs and ratings.

A report from Towers Watson reveals that personal auto insurance providers are using telematics largely to record information about when, where and how a vehicle is driven, as well as annual mileage.

Many are looking at the possibilities of using the collected data to encourage better driving behaviors or for rating purposes. Proponents of telematics suggest they may allow more specific rating and pricing than other methods.

Similarly, business insurance policies and other property and casualty coverage is being enhanced with predictive modeling, according to the report. Many insurers indicated they will use such techniques for risk selection and pricing, which may be more accurate as a result.

Those using predictive modeling stated it allows better rate accuracy, loss ratio improvement and stronger profitability, as well as better renewal retention. Consumers and businesses may be enticed by the prospect of lower costs if they can demonstrate safety on the roads and decreased risks with the help of telematics, although some have raised concerns about the information telematics can provide on drivers.