Actuarial pricing, capital modelling and reserving

Pricing Squad

Issue 13 -- April 2017

Welcome back to Pricing Squad!

Pricing Squad is a newsletter for fellow pricing practitioners and actuaries in general insurance.

Today's issue is about telematics pricing.

You can also read a review of Excess of Loss Pricing Explained by Keith Riley.

Six facts about telematics pricing

Are you thinking about telematics, driverless cars, artificial intelligence and Big Data?

I'm not sure about the rest of these buzz words, but telematics is real, and below are some facts about its pricing.

  1. There are at least eleven distinct telematics insurance products in the UK private motor sector at the moment (and the rest of this post is based on these eleven), accounting for about 5% of the total private motor market.
  2. "Telematics" means different things for different products. Aviva uses telematics mostly as a marketing and risk selection tool, while Insure the Box has developed a whole unique product around it. Other providers are somewhere in between these two.
  3. Some providers only read in telematics data once in a policy's lifetime, at the point of new business. The majority use telematics records at each renewal. One in four use the data quarterly - resulting in quarterly premium adjustments. And just one provides cycles based on their customers' driving habits each month.
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