(Repeat for additional subscribers)
May 1 (The following statement was released by the rating agency)
Fitch Ratings believes the UK motor insurance industry's
earnings will benefit from the growing use of telematics - devices fitted to
cars that collect data on driving behaviour so that insurers can tailor
individual policies - and "big data."
As pressure on insurers' earnings from underwriting is expected to continue,
these tools have the potential to improve the profitability of motor insurers by
addressing long-standing industry issues including increased claims costs and
fraud. Telematics technologies could help insurers to better price their risks
leading to more informed underwriting and improving customer retention.
While the telematics penetration rate is still low, regulatory changes and
partnerships between insurers and technology providers could promote the growth
of the telematics market. The eCall initiative will require all new cars in the
EU to be equipped with telematics devices by 2015, providing the opportunity for
insurers to use this infrastructure for telematics-based policies.
As the use of new technologies becomes commonplace in the industry, there will
ultimately be winners and losers. Firms with agile operating structures and
efficient decision-making processes will be better positioned to benefit from
the innovation. Insurers implementing telematics earlier than peers will also be
likely to benefit from retaining lower risk drivers.
The report "Innovation and Opportunities in a Challenging Market" is available
at www.fitchratings.com or by clicking on the link above.
Link to Fitch Ratings' Report: UK Personal Motor Insurance