"Telematics and event data recorders (EDR) should be on every insurer's radar," said research and consulting firm Celent in its 30-page report titled "Vehicle Data and Telematics: What Does the Future Hold for the Insurer." Coauthored by Catherine Stagg-Macey and Ashley Evans, senior analyst and analyst at Celent (respectively), the report explores the various ways in which primary benefactors -- commercial fleet insurers and personal motor insurance limited to niche products -- can avail themselves of the benefits the technology affords.

Within the context of the motor industry sector, EDRs are the most heavily adopted of available data recording devices -- composed of trip-logging, GPS and telematics -- largely because of the prevalence of airbags designed to record pre-crash data. In fact, Stagg-Macey and Evans said that, in the U.S. alone, more than 65 percent of post-2004 vehicles are equipped with an airbag control module with EDR capability.

Similar to the "black boxes" associated with the commercial airline industry, EDRs can document the seconds leading up to a crash, rather than log driver performance over an extended period of time. Though limited, this amount of information can be of vital importance in assessing claims, as adjusters can chart the speed, brake position, airbag deployment status, and the velocity changes of 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-Macey said. "For claim adjusters in particular, crash data can help weed out bodily injury and physical damage fraud, help determine negligence and generally speed the adjusting process."

Other types of recording devices can be used to facilitate more accurate claim processing. For instance, video cameras in cars used for assistance in parking could be employed to analyze driver behavior, and telematics, when used effectively, would enable insurers to respond more quickly to accidents. Because an insurer would learn of any given accident sooner, it could potentially enhance the service it extends to the customer -- in the form of quicker vehicle recovery and repair.

In the report, case studies further substantiate benefits of event data recording, detailing the experiences of companies around the globe that use the technology to expedite and improve handling of bodily injury claims and reduce claim loss ratios. Aside from the claim-focused results, the paper contains additional user success stories demonstrating how this sort of data collection has spurred the creation of innovative products and has introduced granularity to risk management.

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

Interested in more auto-claim news and in-depth articles? Head over to Claims' auto-claim channel for more information.

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