The ABI and BIBA publishes consumer guide to help customers buying ‘pay how you drive’ insurance

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    The Association of British Insurers (ABI) has produced guidance to help consumers get the most from ‘pay how you drive’ motor insurance (sometimes referred to as telematics). This insurance reflects individual driving behaviour which can mean lower premiums for lower-risk drivers.

    This insurance commonly uses small in-car computers often known as a ‘black box’ to relay to the insurer driving information such as how long, how far and at what time the vehicle being driven for, the types of road used, as well as speed, braking, and acceleration behaviour. This information is considered along with other risk factors such as the driver’s age and occupation to set premiums.

    The ABI has produced two guides, in association with the British Insurance Brokers Association (BIBA).

    The first guide is for consumers and explains:

    – What to expect from a pay how you drive policy.

    – The importance of driving behaviour in affecting the cost of motor insurance.

    – Other benefits that these policies can offer, such as tracking to help locate your vehicle if it is stolen.

    – Safeguards to ensure your recorded driving information is kept secure and your rights to access this data.

    The second guide is for the insurance industry, and defines good practice to ensure that customers buying these products continue to be treated fairly and their data is protected. The guidance set out:

    – Actions for managing and handling telematics data to ensure compliance with data protection legislation and maintain consumer confidence in the industry’s use of personal data.

    – Steps to ensure customers are treated fairly and minimise instances of customer detriment.

    Kate Carr, the ABI’s Head of Fraud and Specialist Lines, said: “‘Pay how you drive’ policies have the potential to dramatically change the motor insurance market. They have been developed to recognise and reward good driving behaviour through lower motor insurance premiums, and to encourage safer driving generally.

    “The emergence of telematics technology presents a new challenge for insurers as they design new products that best meet the needs of their customers. The guidance released today will help insurers develop products that are consumer friendly, while also helping consumers understand whether a telematics policy is right for them.”

    Steve White, CEO of BIBA, said: “We welcome any initiative that leads to greater transparency and trust, and will therefore benefit consumers. The ABI and BIBA good practice guide will ensure that customers can trust their insurer to use their telematics data responsibly, and that customers receive all the information they need to understand how their telematics policy works. That can only be a good thing.”