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Near-miss telematics in motor insurance

Guillen, M., Nielsen, J. P. ORCID: 0000-0002-2798-0817 & Perez-Marin, A. M. (2021). Near-miss telematics in motor insurance. Journal Of Risk And Insurance, 88(3), pp. 569-589. doi: 10.1111/jori.12340


We present a method to integrate telematics data in a pay‐how‐you‐drive insurance pricing scheme that penalizes some near‐miss events. We illustrate our method with a sample of drivers for whom information on near‐miss events and claims frequency records are available. We discuss the implications for motor insurance ratemaking. Our pricing principle is to combine a baseline insurance premium with added extra charges for near‐miss events indicating risky driving (or discounts) that can be updated on a weekly basis. This procedure provides an incentive for safe driving. In our real‐case study illustration, hard‐braking and acceleration events as well as smartphone use while driving increase the cost of insurance.

Publication Type: Article
Additional Information: This is an open access article under the terms of the Creative Commons Attribution‐NonCommercial‐NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non‐commercial and no modifications or adaptations are made. © 2021 The Authors. Journal of Risk and Insurance published by Wiley Periodicals LLC on behalf of American Risk and Insurance Association.
Publisher Keywords: claims frequency, dynamic ratemaking, Poisson model, pricing
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School > Actuarial Science & Insurance
Text - Published Version
Available under License Creative Commons Attribution Non-commercial No Derivatives.

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