GlobalData Plc

Dash cams: the new telematics?

Dash cam uptake in the UK has risen and could be used as an opportunity by insurers to provide another way for customers to earn discounts on their car insurance premiums.

Telematics-based policies have been the chosen solution for drivers to gain discounts on their car insurance by demonstrating safe driving. But dashboard cameras – “dash cams” – are now also establishing popularity in the market by offering an alternative route for customers wanting to lower their premiums.

It is estimated there are 3 million dash cams in use in UK cars, according to the Guardian. Over recent years the number of dash cams has skyrocketed, reasoned by the number of high-street stores stocking cameras. According to market research firm GfK, UK dash cam sales increased by 918% from 2014 to 2015. Meanwhile according to the British Insurance Brokers’ Association (BIBA) in 2016 there were over 750,000 live telematics policies in the UK – an increase of nearly 25% on 2015.

Customer engagement with telematics-based policies has historically been challenging, with the majority of policies being held by younger drivers under 25, although appeal is now growing among drivers of all ages. The issue has been that telematics propositions which record and monitor driving style and safety have been seen as a breach of privacy that customers do not want. It is therefore interesting that dash cams have risen in popularity considering that taking visual footage of driving could be seen as more intrusive.

Dash cams record a driver’s-eye view of the road ahead on every journey. They are cheap and easy to use and install and the benefit is that dash cam footage is accepted by police and UK courts, and can be used within insurance claims as evidence.

Using dash cams to encourage safer driving and reward customers through discounts is therefore an alternative to telematics policies for insurers. AXA and Swiftcover currently offer dash cam discounts of 10% to 12.5% for drivers who install the device. Adrian Flux offers up to a 15% discount, RAC offers a flat £30 discount, and SureThing! offers a 20% discount (but only when using a Nextbase camera).

According to Moneysupermarket.com, telematics insurance companies estimate they can cut the average car insurance premium by about 25% for safe drivers. So while dash cams may not offer as much in savings as a telematics policy, they are still a way for customers to earn discounts, and are perhaps a solution consumers will be more comfortable with.

Considering their rising popularity, more insurers should offer discounts for drivers who install dash cams, as like a black box, the device will instill safer driving behavior. Dash cams are an opportunity that insurers should look to explore further.

By Danielle Cripps, General Insurance Analyst

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