Telematics - Bringing global trends home

A recent Telematics Conference in Chicago in the US, attended by Tracker representatives, provided a unique opportunity to benchmark the local industry, and its potential for South African consumers and insurers, against the latest global trends and developments.

Telematics is a confluence of telecommunications and information technology, which creates statistical and informational value for a number of potential users – not least among which is the local insurance industry.

The real thing

Not every vehicle tracking system is a telematics device. “Some vehicle tracking devices utilise a very simple, yet highly effective, radio frequency transponder device,” explains Michael du Preez of Tracker. “It may have no other function other than broadcasting a coded signal that can be tracked by a computer to facilitate only the tracking and recovery of the vehicle in question. Telematics, on the other hand, record various aspects of a vehicle’s movements and/or status, and requires a transfer of various different streams of data.”

SA in the global context

The technology available in South Africa is among the best in the world. “Tracker’s key partner for the past 14 years is an American-based company, LoJack, which is not only the world’s most successful vehicle tracking organisation, but the company which brought mainstream commercial tracking to the world in 1986,” says du Preez. “LoJack is the market leader in virtually every territory in which it operates. Currently, this extends to some 30 nations worldwide, including the US, UK, France, Mexico, Brazil and Columbia.

“Tracker’s current GPS-GSM devices and systems are responsible for several world firsts, including the first application of an embedded SIM in a tracking product. Tracker has also recently purchased a R200 million stake in a Swiss-based company, Cobra Services Network, which will strengthen our position as one of the world’s leading vehicle tracking and monitoring companies.”

Local benefits

Due to this leading LoJack technology, utilised in Tracker’s radio frequency products (Tracker Retrieve and Tracker Alert), Tracker has recovered more vehicles, which has led to more arrests, than any other tracking company in Africa. “Not only does Tracker co-develop its own products and technology, but we benefit from a sophisticated engineering hub that is constantly working on new systems and technology to further advance the industry,” adds du Preez.

Implications for local insurers

These advanced GPS-GSM devices and systems have been the pioneering power behind the insurance industry’s first pay-as-you-drive consumer offerings.

“There is absolutely no question that telematics offers real value to the insurance industry,” says du Preez. “If an insurer can access information that allows driving patterns and behaviour to be assessed, accurate risk rating become possible and the insurer could influence, improve and even reward, good driver behaviour. For example, the technology can reveal signs of harsh breaking or over-revving. Telematics information could also assist in accident investigations and help combat fraudulent claims – for example, pinpointing the location of the vehicle prior to the accident, or providing insights through accelerometer data.”

Tracker expects that the use of telematics to facilitate underwriting decisions will become common practice for insurers sooner rather than later. “If the information is available affordably, there is no question that the benefits will outweigh the cost of the tracking or telematics device. As tracking devices become more beneficial to more of the affected players - insurers, brokers, dealerships, vehicle manufacturers, warranty agencies, the SAPS, government and consumers - it will almost certainly drive change. It is also only a matter of time until clients themselves will demand better premiums based on their own personal driver risk, instead of that of a pre-determined category.”

Market response

“However, we do not believe that telematics will become compulsory in the insurance industry, particularly in light of the privacy issues that may arise. We estimate that less than 30% of the entire car park in South Africa is currently fitted with some kind of tracking or telematics device.

"Tracker, as the largest tracking company in South Africa, currently protects around 620 000 vehicles. Before compulsory tracking or telematics devices can even be considered, several other issues have to be addressed first, such as the thousands of unlicenced, uninsured and un-roadworthy vehicles on our roads,” comments du Preez.

“The more likely scenario is that those insurance clients who choose to embrace this technology will benefit from a better overall insurance product or package. Improving, encouraging and rewarding safe driver behaviour will hopefully also lead to fewer deaths and less carnage on our roads.”