"Telematics and event data recorders (EDR) should be on everyinsurer's radar," said research and consulting firm Celent in its30-page report titled "Vehicle Data and Telematics: What Does theFuture Hold for the Insurer." Coauthored by Catherine Stagg-Maceyand Ashley Evans, senior analyst and analyst at Celent(respectively), the report explores the various ways in whichprimary benefactors -- commercial fleet insurers and personal motorinsurance limited to niche products -- can avail themselves of thebenefits the technology affords.

Within the context of the motor industry sector, EDRs are themost heavily adopted of available data recording devices --composed of trip-logging, GPS and telematics -- largely because ofthe prevalence of airbags designed to record pre-crash data. Infact, Stagg-Macey and Evans said that, in the U.S. alone, more than65 percent of post-2004 vehicles are equipped with an airbagcontrol module with EDR capability.

Similar to the "black boxes" associated with the commercialairline industry, EDRs can document the seconds leading up to acrash, rather than log driver performance over an extended periodof time. Though limited, this amount of information can be of vitalimportance in assessing claims, as adjusters can chart the speed,brake position, airbag deployment status, and the velocity changesof an insured car at the time of an accident.

"This type of data collection drives down claim costs,especially in fleets, while lowering loss ratios," Stagg-Maceysaid. "For claim adjusters in particular, crash data can help weedout bodily injury and physical damage fraud, help determinenegligence and generally speed the adjusting process."

Other types of recording devices can be used to facilitate moreaccurate claim processing. For instance, video cameras in cars usedfor assistance in parking could be employed to analyze driverbehavior, and telematics, when used effectively, would enableinsurers to respond more quickly to accidents. Because an insurerwould learn of any given accident sooner, it could potentiallyenhance the service it extends to the customer -- in the form ofquicker vehicle recovery and repair.

In the report, case studies further substantiate benefits ofevent data recording, detailing the experiences of companies aroundthe globe that use the technology to expedite and improve handlingof bodily injury claims and reduce claim loss ratios. Aside fromthe claim-focused results, the paper contains additional usersuccess stories demonstrating how this sort of data collection hasspurred the creation of innovative products and has introducedgranularity to risk management.

Celent's full report may be viewed by clicking here.

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