Improving Risk-Based Auto Underwriting

From a consumer perspective, global positioning system (GPS) technology offers a convenient, portable means of navigation when traveling. For insurers, GPS devices are becoming a potentially rich source of data. When used in conjunction with sophisticated predictive analytics, such data can help insurers more accurately segment risk and develop innovative discount programs for policyholders. Insurers can use available GPS data during the underwriting process to determine rates based on the actual annual miles driven instead of relying on estimated average miles driven as supplied by policyholders. Authentication and verification of mileage-based programs not only ensure savings for drivers but also provide insurers with the opportunity to avoid lost premiums based on underestimated annual mileage.