Data extracted from telematics products has the potential to assist car insurers in accurately pricing risks, boost road safety and prevent motor fraud. In addition, the many technologies encompassed by telematics offer the opportunity for other innovations, new ideas, and exciting breakthroughs. In a recent discussion, leading insurance experts including our own Nigel Walsh, considered the opportunities offered by telematics and the challenges of convincing drivers of its benefits.
In general, telematics refers to any device that merges telecommunications and informatics. Familiar examples include GPS and navigation systems. By enabling wireless data communication through tracking and tracing, telematics offers a huge number of ways of gathering information about driver and vehicle behaviour as well as providing services.
Specialist insurance journal Post, in association with Octo Telematics, recently brought together representatives from the insurance and aggregator communities to discuss how telematics and the data it collects could transform insurers’ offerings. The expert panel, which included Nigel Walsh, our UK insurance head, considered the many opportunities offered by telematics technology.
As Nigel explained, he “was invited to join a panel of leading insurance figures including analysts, carriers and providers of telematics to discuss the UK insurance market. The objective, which was clearly met, was to discuss the pros and cons of telematics and establish whether or not UK Insurance could profit from this. It was a very interactive discussion and a great opportunity to get our view into the market.”
The panel considered the two main reasons customers might be attracted to telematics-linked insurance policies, namely saving money and offering peace of mind. Telematics insurance enables drivers to make substantial savings on their car insurance payments by linking the cost of premiums on how carefully they drive. Telematics are believed to encourage better and more responsible driving as drivers behaviour is recorded and tracked by a fitted device.
The benefits of this approach are beginning to be seen with new, young drivers. Data derived from telematics not only reassures parents about their children’s driving behaviour, it enables novice drivers to prove that they are good drivers and demonstrates their eligibility for a reduction in premium costs.
Telematics could also improve safety through pinpointing accidents, traffic, and difficult driving conditions. The technologyy also has the potential to provide convenience to users, for example by enabling them to interact with and take advantage of their vehicles through voice-activated controls. However, given its focus, the group highlighted the risk of insurers reaching beyond their skillset, and were keen to emphasise that they should not become side-tracked with pursuing sidelined opportunities.
Ultimately the group concluded that the shift towards the customer will depend on how best to use the data collected by telematics devices; balancing that with other offers that are attractive to drivers.
Read the full article on the Post magazine website [subscription required].