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25th April 2012

Study predicts telematics take off in UK

57% of UK drivers believe they will switch to a telematics or "black box" insurance policy in the next five years, according to a new study from Gocompare.com.
The study into the relationship between driving habits and insurance found that a wide cross-section of motorists are open to the idea of telematics-based car insurance. In fact, 59% of over 55s said they may switch to one of these policies in the next five years and 19% of all drivers were happy to consider it at their next renewal.
However, the research also identified the issues which have held back the sector until now, including low levels of awareness, the lack of big name insurers and evidence of real savings in terms of premiums and fuel costs.
The survey highlighted the strong underlying support for car insurance premiums based primarily on the way you drive, not on age and gender, with careful drivers rewarded with cheaper premiums
-92% of drivers think that their car insurance premiums should be based largely on the way they drive;
-97% think careful drivers should be rewarded with cheaper insurance;
-60% think that car insurance premiums should be based on where they drive and the time of day;
-Only 49% think premiums should be based largely on age and gender.
Scott Kelly, head of car insurance at Gocompare.com comments "Over the last few years we've seen car insurance premiums reach record highs. The outlook for 2012 is little better with further increases expected, as well as a degree of uncertainty for young drivers once the European Court of Justice gender ruling takes effect; insurers will no-longer be able to take gender into account when calculating premiums.
Most insurers currently price their policies based on a series of generalisations around claims experience, location, age, sex and the type of car. Most don't consider an individual's actual driving habits until they have built up a record of safe, claim-free or incident-free driving over a number of years and have subsequently earned a no-claims discount. According to insurance companies, young drivers-particularly males-are most likely to make claims and therefore face the highest premiums. The average shop around premium for a driver aged between 17 and 22 is £2,497, nearly treble the average price. While this group has potentially the most to gain from "black box" car insurance, with an average saving of £521 achieved with insurethebox telematics insurance, the concept appears to have broad appeal."
Gocompare.com's research also outlined the steps the industry still needs to take to make "black box" car insurance policies more attractive to consumers:
75% of drivers would expect cheaper car insurance premiums.
54% would like regular incentives in terms of discounts and special deals.
-43% think more awareness of the benefits of behaviour-based policies would be beneficial'
-40% would like savings on fuel by driving better or less'
-35% want to see big insurance brands offering behaviour-based policies'
-33% would like to be able to access data on their driving behaviour via a PC-based dashboard'
-29% would appreciate advice on how to improve their driving based on their own data.
Kelly concluded "Given the rising costs of motoring, we think that the new generation of telematics car insurance policies will play a greater role in the car insurance market in the coming months. And, as our survey shows, many drivers, across all age groups, would happily embrace the new in-car technology in a bid to keep their premiums down."