The impact of telematics on the insurability of risks
ISSN: 1526-5943
Article publication date: 8 April 2020
Issue publication date: 19 June 2020
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.
Keywords
Acknowledgements
The authors would like to thank two anonymous reviewers for valuable input and for the feedback they got at the 2017 conference of the Asian Pacific Risk and Insurance Association.
Citation
Eling, M. and Kraft, M. (2020), "The impact of telematics on the insurability of risks", Journal of Risk Finance, Vol. 21 No. 2, pp. 77-109. https://doi.org/10.1108/JRF-07-2019-0129
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited