Discusses the growth of usage-based insurance and how it works through telematics devices to relay driving information to carriers, leading to telematics based rating rather than traditional methods.
March 03, 2020 at 05:26 AM
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In early 2016, we wrote about telematics, or usage based insurance (UBI), and its effects on the insurance industry. In 2019, the UBI market reached an estimated $24 billion, and projections are that the market will grow to $125.7 billion by 2027.
Usage-based insurance can also be referred to as Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Pay-As-You-Go, and Distance-Based Insurance. All of these terms refer to telematics. A telematics device — also called a black box or a dongle — is a small device that plugs into a vehicle’s diagnostic port, or it may be integrated into the vehicle itself, to track the mileage and monitor the driver’s behavior. A SIM card and modem in the device enables telecommunication of this information via a cellular network.
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