In the past, insurance companies have been dependent on rough data such as age and gender in order to distinguish between drivers and set premiums.

The amount you are asked to pay out by underwriters is determined by broad generalisations about the driving habits of your social demographic in order to determine the likelihood that you will crash . Now, with ‘telematics insurance’, insurers will be able to monitor their customers’ driving, allowing them to distinguish between safer and less safe drivers through devices in the car which beam data back to the insurance company.

According to The Economist, the way these ‘gizmos’ measure risk factors varies, from the amount of time you spend on the road, to judging your driving ability based on the amount you break the speed limit, slam the brakes or take corners on two wheels.

For customers, these changes can mean substantial savings for safe drivers, particularly they are also in demographics more prone to crashing, such as young men. For insurance companies, the rewards are even more substantial: in the future, they could pick and choose individual customers.

Find out more about underwriters and other jobs roles in insurance.

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