In the wake of the ruling by the European Court of Justice banning the practice of providing discount car insurance for women on the basis of gender inequality, insurers are turning to new technology to instead charge car insurance rates that reflect a driver’s individual risk.
The motor car insurance technology, known as telematics to industry insiders, to monitor a driver’s behaviour behind the wheel has been available for quite some time in theory, experts say, but implementing such technology on a large scale was never considered to be a cost effective solution. However, with the ECJ ruling prompting car insurance companies to explore new options for underwriting policies, telematics has the potential to completely transform the industry.
Moody’s said in their recent market outlook that any insurer that offers the technology will have positioned themselves in a place to reap significant benefits once the new insurance regulations go into effect. Moody’s also said that while at the moment companies that do not adapt to the new technology are not in any immediate danger, telematics frontrunners will have a substantial competitive advantage in regards to policy retention and pricing in the long term.
Traditional insurers will most likely have to raise the premium prices of their female customers by as much as 25 per cent once the laws go into effect next year, as they currently pay lower premiums than their male counterparts due to a statistical likelihood of being involved in a smaller number of accidents. This could lead to a mass exodus of female policyholders as they go searching for the best deals, which have led many savvy insurance providers to invest in telematics technology.