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The impact of telematics on the insurability of risks

Author

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  • Martin Eling
  • Mirko Kraft

Abstract

Purpose - The purpose of this paper is to analyze the use of telematics in insurance and its consequences for the insurability of risks. Empirical results on monitoring policyholders or insured objects and its consequences for asymmetric information, as well as claims frequency and severity are discussed. Furthermore, potential future research questions that arise from the use of telematics in risk management and insurance are outlined. Design/methodology/approach - The paper systematically reviews existing studies and then investigates the consequences of telematics using Berliner’s insurability criteria. The results are based on 52 academic studies and industry papers published from 2000 to 2019. Findings - The findings emphasize the effects of new information on information asymmetry and risk pooling, the implications of new technologies on loss frequency and severity, legal restrictions and ethical consequences of the use of telematics in the insurance field. Problems with the insurability impede the market development of innovations such as telematics tariffs. Originality/value - Despite its increasing relevance for businesses at present, research on telematics in insurance is limited. Some papers can be found in the IT domain, but relatively little research has been done in the business and economics literature. The authors illustrate where the research stands currently and outline directions for future research.

Suggested Citation

  • Martin Eling & Mirko Kraft, 2020. "The impact of telematics on the insurability of risks," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 21(2), pages 77-109, April.
    • Handle: RePEc:eme:jrfpps:jrf-07-2019-0129
    DOI: 10.1108/JRF-07-2019-0129
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    Citations

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    Cited by:

    1. Martin Eling & Irina Gemmo & Danjela Guxha & Hato Schmeiser, 2024. "Big data, risk classification, and privacy in insurance markets," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 49(1), pages 75-126, March.
    2. Lukas Stricker & Carlo Pugnetti & Joël Wagner & Angela Zeier Röschmann, 2022. "Green Insurance: A Roadmap for Executive Management," JRFM, MDPI, vol. 15(5), pages 1-19, May.
    3. Albrecht Fritzsche & Alexander Bohnert, 2022. "Implications of bundled offerings for business development and competitive strategy in digital insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(4), pages 817-834, October.
    4. Alfiero, Simona & Battisti, Enrico & Ηadjielias, Elias, 2022. "Black box technology, usage-based insurance, and prediction of purchase behavior: Evidence from the auto insurance sector," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    5. Vikas Chauhan & Rohit Joshi & Vipin Choudhary, 2024. "Understanding intention to adopt telematics-based automobile insurance in an emerging economy: a mixed-method approach," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(3), pages 1017-1036, September.
    6. Montserrat Guillen & Jens Perch Nielsen & Ana M. Pérez‐Marín, 2021. "Near‐miss telematics in motor insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(3), pages 569-589, September.
    7. Nemanja Milanović & Miloš Milosavljević & Slađana Benković & Dušan Starčević & Željko Spasenić, 2020. "An Acceptance Approach for Novel Technologies in Car Insurance," Sustainability, MDPI, vol. 12(24), pages 1-15, December.

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