Insurance group Britam Holdings has begun using a new technology tracking drivers’ data and behaviour to better segment and price its policies in the motor vehicle business that has one of the highest loss ratios.
The company joins its rivals ICEA Lion and Heritage which had earlier adopted telematics technology whose key advantage is tracking motorists’ behaviours such as hard braking, speed and distance travelled.
The data can be used to lock out aggressive drivers or raise premiums on their policies. Cautious motorists can also be rewarded through lower premiums.
“As Britam, we do not discriminate. What we are doing is pricing scientifically and if you are not able to pay the right premium that we think you should, then we don't proceed,” Britam’s chief executive Tom Gitogo said.
“With our price rating, we look at the claims experience, because we analyse data. We will have different premium rates for different risks. An old car will most likely cause an accident, the brakes may not be there in the evening even though they were there in the morning.”
High claims have sent the private and commercial motor insurance segments into the 10th and 15th straight year of underwriting losses respectively, with the situation compounded by price undercutting.
Data from Insurance Regulatory Authority (IRA) shows private and commercial motor accident classes incurred the highest underwriting losses under the general insurance business at Sh2.89 billion and Sh1.75 billion respectively in the quarter that ended September 2022.
However, this was a decline from Sh4.83 billion and Sh2.48 billion recorded in the same period in 2021.
As a result, some insurers are turning to telematics technology allowing data collection, analytics and transmitting driving behaviour of acceleration, braking, and cornering to the firms.
The comprehensive formula combines the driving data which will be used to calculate the driving score and determine how well or poorly a vehicle is driven.
The telematics device also retrieves data generated by the vehicle like GPS location, speed, engine light information and faults.
Customers benefit from the policy through reduced cost of insurance which is attained through premium cash back to the customer at the end of the policy year based on the driver’s score.