Drivers take control with telematics

The benefits of telematics have been welcomed by many motorists in America and Europe, while the adoption rate of South African drivers still remains low. However, the various advantages will eventually become clear with the assistance of brokers and financial advisers, says Willem Smith, Managing Director of Personal Lines at Hollard Insurance.

“In personal motor insurance, on-board telematics brings control over premiums to responsible drivers and that is only fair; in the same way that policyholders who park their cars in lockup garages overnight lower their risk of loss and see the result in lower premiums. Any insurance policy is based on the policyholder’s agreement to take specific precautions to secure assets, and if you think about it, agreeing to drive responsibly is no different. Telematics technology means the same degree of evidence regarding proactive risk management can apply to driver behaviour, as to having a lockup garage to park in at night,” says Smith.

The role of the broker

Smith believes brokers could help their clients understand the benefits of telematics by comparing those risk management principals to other areas the public understands well.

“For instance, home owners happily use monitored security cameras in their homes, as a form of protection and do not see it as an intrusion. I believe those who are embracing telematics see it the same way,” adds Smith.

Brokers will also form an important link between clients and insurers when it comes to using the information gathered by telematics to negotiate lower premiums.

Other telematics benefits

Right now, consumers can choose to accept or reject the benefits of motor insurance including telematics, but insurers will certainly be rolling out more products with this feature. These are the benefits telematics delivers:

• Lower premiums are the policyholder’s reward for good driving behaviour. Linking insurance premiums to actual driver behaviour is fair, and increases affordability for lower-risk drivers. It also gives individuals the power to control their premiums, incentivising them to reduce distance driving and adopt safer driving habits.
• Car owners can also monitor the driving behaviour of whoever is in the driving seat of their car. Whether they are at the wheel or not, this means the owner can observe their car’s speed, collisions and harsh braking which delivers potentially life-saving and objective information. This knowledge can help improve their own driving behaviour or that of a family member, averting future life and death scenarios.
• Telematics devices can also detect accidents by measuring impact. This means an ambulance or tow service can potentially be dispatched without a phone call. This is a clear advantage, especially when a solo driver is injured and cannot make a phone call or there is no cell phone signal.

According to Smith, these are the kinds of benefits telematics supporters understand, which have outweighed any possible fear of having a ‘big brother is watching’ feeling, or having a claim rejected unfairly.

“From an insurer’s point of view, claims which adhere to the terms of the insurance agreement are honoured. Insurance is a two-way agreement: we agree to cover losses and policyholders agree to do their share. Whether it is having burglar bars on house windows or any other form of protection against loss, such as driving sensibly,” says Smith

The intermediary role

Keeping pace with complex changes, including increased technology, and passing on that knowledge to clients, is an ongoing challenge for intermediaries and financial advisers.

“One of those developments is telematics. While much attention has been focused on this technology in the context of personal lines insurance, benefits are also extensive in the business insurance arenas, for example in fleet insurance and management”.

“This will include knowing how client data is used. The Protection of Personal Information Act (POPI) will be an important piece of legislation in this space, and a topic we will all have to keep well informed about while all the benefits and uses of telematics unfold,” concludes Smith.