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Telematics can significantly enhance insurer capabilities in driver segmentation through the provision of personalized driving scores based on monitored behavior. This technology involves the use of devices installed in vehicles that track various aspects of driving behavior, such as speed, acceleration, braking patterns, and even time of day when driving occurs.

By analyzing this real-time data, insurers can assess how safe or risky a driver is and generate a personalized driving score. This score acts as a direct indicator of driving behavior and risk, allowing insurers to segment drivers into categories based on their individual risk profiles. Such segmentation can lead to more tailored insurance policies, enabling insurers to offer customized rates that reflect the actual risk a driver presents, rather than relying on generalized assumptions or demographic factors.

Consequently, this method not only improves pricing accuracy but also encourages safer driving habits by providing feedback to drivers, thereby fostering a better understanding of their driving behavior.