Wondering how historical data helps in high-risk auto insurance analysis? Most insurance companies are beginning to utilize data services to analyze risks and determine the premiums they will charge. For example, high-risk auto insurance is a term used by certain insurance companies wherein the policyholders are charged higher premiums based on their high-risk driving behavior.
Herein, an auto insurance company will decline the policy if the driver has a history of violations or accidents. On the other hand, insurers may use different parameters to determine acceptable risk levels to calculate the premium costs.
This article discusses high-risk auto insurance and how historical data helps ease the risk.
How do insurers assess risk?
Insurers employ a range of factors to assess the risk of your car premium. These include:
- Age of insurance holder
- Credit Rating
- Driving Record
- Safety Features
Read more below
- Age of insurance holder
Usually, accidents are caused by those who are less experienced, and disregard proper traffic conduct. A well-experienced driver will know speed limits and follow road regulations. According to reports, young drivers in the age group of 15 to 24 years, 12% of the licensed population, are prone to accidents.
- Credit Rating:
Credit rating throws light on a policyholder’s money management behavior. These include information such as bankruptcies, outstanding debt, credit history, application for new credit, timelines for debt repayment, and collections. As per insurers, policyholders with good credit scores are rated higher, and at lower risk.
- Driving Record
Records like multiple tickets and frequent accidents lead to an increase in car insurance rates. Reckless driving and irresponsible driving significantly increases the driver’s risk profile, thereby impacting the overall policy rates.
- Safety Features:
An insurer may check if the car includes all the safety features, such as anti-lock brakes, airbags, stability control, etc., that help mitigate accidents.
What are some characteristics of high-risk drivers?
High-risk drivers are individuals who are known for their irresponsible driving etiquette. Some defining characteristics of high-risk drivers include the following:
- Involvement in multiple collisions
- Over-speeding or DUI conviction
- Multiple criminal charges or faulty accidents consecutively
- Few tickets or frequent minor violations
How Does Historical Data Help Auto Insurance Companies Conduct High-Risk Auto Insurance Analysis & Risk Assessment ?
Car insurance companies utilize several factors to record driving and behind-the-wheel habits. However, with the advent of connected data services, it has become easier for insurers to track driving habits and determine the insurance rates that represent the risks.
Real-time and historical data can be tactically used to conduct risk assessments & High-Risk Auto Insurance Analysis by monitoring driving habits and customizing a program that fits the risks involved.
1. Connected vehicle data include both real-time and historical data
Connected vehicle data encompasses real-time and historical data. It accounts for parameters such as speed, current location, fuel tank level, vehicle health status, battery, tire pressure, odometer reading, etc., to determine an effective solution. It also utilizes historical data such as driver behavior, risk driving, etc., unique to the vehicle, driver, and operation.
2. High-Risk Auto Insurance Analysis & Assessment can be conducted by Auto Insurance Companies with driver’s historical data
Connected car data assists auto insurance companies in accessing drivers’ historical data ranging from 3 to 6 months to analyze driver behavior accurately. In addition, it eases for the insurer to assess risk and analyze its effect on insurance.
CerebrumX connected data services collect attributes like:
- Rapid Acceleration
- Harsh Braking
- Odometer Readings
- Safety Belt Usage
Read more about it below
The level of acceleration and speed indicates aggressive driving. Herein, an increase in speed beyond a specific limit will be considered high risk. It helps in understanding driver behavior and determining if they are an aggressive or unsafe driver.
Multiple insurance providers install telematics and Connected car data services to track drivers’ behavior, including speeding, hard braking, and using a phone when driving. Rapid harsh braking indicates aggressive driving and throws light on aspects of the driver managing traffic, breaking signals, or driving beyond the speed limit.
It is used to measure the force exerted on the vehicle. The cornering data helps determine how much force the driver puts into cornering the vehicle. It assists in monitoring if the driver takes reckless turns, or corners sharply. In short it will help decide if the user is a reckless or a safe driver, DUI, etc.
Odometer readings help in measuring the distance traveled. Calculating accurate readings helps in transparently identifying how many miles the vehicle travels, checking the vehicle for potential faults and maintaining service schedules. Besides, it will help insurers understand the age of the vehicle and if it is past its optimal lifespan.
Over-speeding will directly throw light on how harsh or safe a driver is. In addition, understanding how often the driver was charged for speeding tickets will help decrease or increase car insurance rates.
Safety Belt Usage
A safety belt is necessary for every vehicle to avoid injuries and accidents. While each country has a different seat belt law, an insurer will use telematics and Connected Vehicle Data to understand whether the driver is wearing a seat belt or not, thus impacting insurance rates.
3. Historical Data helps to onboard more low-risk drivers
Insurance companies use predictive analytics to determine driver behavior. Based on the data collected from different parameters, the insurance company will provide customized plans aligning with the risks involved.
4. Auto Insurance Companies can boost their operational profitability by offering customized plans
Using telematics and connected data services help in providing customized plans to high-risk drivers by assessing their driving behavior and associated risks. It also helps drivers to get their fleets insured assisting auto insurance companies in boosting their operational profitability.
Historical data helps analyze risks and get better insights necessary for insuring modern-day drivers by taking into consideration the driver behavior. CerebrumX’s ready access to historical data enables auto insurance companies to gather the datasets and analyze different aspects of drivers to provide customers with an accurate auto insurance policy customized per risk. Get started with us today