A telematics data exchange can significantly accelerate innovation in usage-based insurance (UBI) by making the exchange of driving data more convenient for drivers, insurers, and automakers. With its capacity to make driving history more portable, a data exchange also has societal implications that may change the nature of vehicle ownership as we know it.
Reduced cost of ownership: A telematics data exchange can facilitate UBI programs, which typically offer price incentives to consumers who adopt safer driving habits or reduce their mileage. If insurance premiums were to be based on how a consumer actually drives or on annual mileage — rather than on traditional proxies that consider age, gender, marital status, make and model of vehicle, and so forth — the cost of auto insurance could potentially decline.
According to Edmunds.com, an automotive pricing guide, Auto insurance accounts for 10% of overall five-year vehicle ownership costs, so such savings could be meaningful. In addition, there could be a correlation between fewer miles driven and/or safer driving and other societal benefits, including reduced accident rates, lower vehicle emissions, and lower air pollution levels.
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