Insurance and Technology: How Technology Affects Insurance Rates
Insurance and technology are becoming more and more closely related over time, as we develop new technologies for sorting data and tracking individual behaviour. Overall, the purpose of these new technologies is to reward policyholders with good track records and low risk profiles—so most people will benefit from these advances.
Here are a few examples of new technologies that will affect insurance rates over the coming years—or that may already be affecting some specific rates:
- Geocoding for Homes: Insurance rates are currently based on postal codes. Your home insurance can change dramatically by moving a few blocks into a new neighborhood. Geocoding aims to bring greater precision to this process. For example, geocoding can better assess the flood risks of homes by checking their relative elevations and proximity to bodies of water
- Telematics: Telematics provides information on the location, movement and behaviour of a vehicle or a fleet of vehicles. This info can include whether the vehicle’s engine is turned on, its current speed and much more. Aside from providing geotracking, telematics can offer data on safe driving and reward appropriately.
All these new technologies stand to benefit insurance policyholders in the long-term. By providing a better understanding of risk and more individualized ratings, the union of technology and insurance is undoubtedly a good thing for the industry.