What is new in world of telematics?
When the European insurance market introduced telematics about ten years ago, it faced the challenge of overcoming the stigma that telematics will be a ‘big brother’ initiative.
Many consumers believed that their claims would be repudiated due to the data being collected from the telematics device.
Shifting the focus
Back then, technology for telematics used to focus on the speed behaviour of the driver, but the focus is increasingly shifting to the concepts of safety and early response. The industry has since seen an increased uptake in telematics as it provides a sense of security and safety to the insured, rather than having the feeling of being watched.
The increased uptake of telematics in vehicles is largely related to the Ethernet, which is the standard computer networking technology now available in vehicles which allows faster upload and download transmission times of information while the vehicle is moving. This development has improved connectivity systems and resultant safety and security features. We have, for example, recently seen an increase in autopilot systems and vehicle proximity sensors in new vehicles.
Since it was first introduced, there has been a revolution of the algorithms in telematics that are used to mine data, recognise patterns and identify correlations based on the driver’s behaviour. This data can be used for the determination of policy premiums based on the driver’s environment and behaviour. It can also be useful in predicting maintenance alerts on vehicles and providing the history of a previously owned vehicle to the new owner.
A change in the future
Policyholders might see a change in their insurance products in future as products will be based on data gathered from telematics information. The underwriting of insurance will be adapted according to the driver’s telematics report. With the consent of the insured, the reports will provide insurers with valuable information and statistics, allowing changes to be made to the cover and pricing to the benefit of the insured.
When it comes to discussing telematics with clients, it is important to highlight to policyholders that negative data can only be used if it is relevant to the claim. For example, if the client speeds excessively, but the motor vehicle is stolen, the data around the speeding is irrelevant and will not impact the claim. Telematics in fact will better the chances of the vehicle being recovered.
The reality is that not all drivers on South African roads are insured, which has not only increased premiums as a result, but it has equally hindered the recovery process for third party claims. Telematics hopes to mitigate this and improve the recovery process, especially when determining which driver caused the accident.
A forecast of capabilities
For brokers, the data collected from the telematics devices will provide valuable insight into the driving habits of the policyholders. The reports generated will give an indication of whether the policyholder consistently drives recklessly or not. This information can proactively be used to address driving habits in order to reduce the risks of an accident.
Telematics also provides a new way to manage and reduce fraud as it allows insurance providers to identify false accidents, recognise true accidents but false damages, provides useful data to prove bodily injury and damage to goods, and mitigates the chances of false declaration of residence.
In the future, avatar and instant personalisation will become increasingly popular among Millennials, as the driver will be allowed to log into their personal accounts to retrieve their own driving preferences and behaviors of the vehicles they drive.
With a promising future in the telematics industry, experts forecast that telematics products will focus on technology, network capabilities and telematics solutions whereas in the past the predictions focused more on speed, design and technical features. Now that cars are increasingly becoming futuristic high tech systems, teeming with sensors and chips, other capabilities can now be explored.
