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A matter of life and death…

03 November 2014 Jonathan Holden, Innovation Group, Andrew McLintock, Foxfire-BI Consulting

Jonathan Holden, Managing Executive of Insurance at Innovation Group South Africa and Andrew McLintock, Enterprise Solutions Architect and Managing Director of Foxfire-BI Consulting, explain that vehicle accidents cost the South African economy anywhere between R200bn and R325bn every year. If we accept somewhere in the middle as the most realistic figure and divvy this amount up between the number of accidents on our roads annually (960 000 according to the AA), we could estimate that each accident takes a whopping R274 000 bite out of our collective wealth.

However, telematics, one of the fastest growing areas of innovation, has the potential to drastically reduce road fatalities and simultaneously cauterise the gaping financial wound.

Petr Havlik, Managing Director of Cyber- Pro Consulting says that “there are many examples of insurers using telematics to come up with different ways of assessing risk. These can range from how far a person drives to how well they drive and companies have been refining various systems over the years to tailor make it for their specific use,” says Havlik.

The future of telematics

“If you think about it, insurers have been able to use Big Data long before it became a trend. They have all this client data, coupled with telematics data, to be able to extract meaningful insight from it. These include the times during the day when drivers are most at risk for accidents or hijackings, the distance people drive, where they drive, and how they drive,” continues Havlik.

According to Ryan Rudman, Brand Manager at Cardinal, up to 60% of insurers are currently in the process of creating a mobile telematics application. Despite initial doubts over data reliability, the smartphone is fast becoming the solution of choice.

Discovery Insure Chief Executive Officer, Anton Ossip, says, “Telematics is fast changing the insurance landscape. Discovery Insure, for example, is combining telematics technologies and insights from behavioural economics to improve driver behaviour and reward safe driving. For instance, features including statistical analyses allow the insurer to detect when the car may have been stolen or hijacked due to a driving pattern that differs from that of the client.”

Oakhurst Insurance has also embraced telematics right from the beginning of their launch in 2009. “We believe that the applications and benefits of telematics are endless and are an exciting field to be pioneering in. Modern technology has progressed to continuous, real time driving behavior monitoring, which has enabled us to analyse various driving trends that could potentially lead to accidents, allowing us to proactively act on these. We do not believe we have yet realised its full potential but we are on a quest of continued improvement and development,” says Brett Erasmus, Executive Manager of the Broker Division at Oakhurst.

Reinforcing positive behaviour

Ossip says, “poor driver behaviour is the leading cause of accidents and fatalities. When accurate telematics is combined with concepts in behavioural economics, there is enormous potential to improve driver behaviour and further reduce the number of accidents.”

“By using telematics the insurer is able to collect a detailed risk assessment on both individual driver behaviour and vehicle usage, through a rich, real-time user friendly interface. By sharing this data with insurers, policyholders can prove they are low risk, which may bring down their insurance premiums. In turn, this enables insurers to reduce their costs, offer more competitive premiums and provide additional value added services,” says Rudman.

Michelé Schliesser, Mutual & Federal’s Executive for Operations says, “the rollout of these new IT-enabled capabilities will require that we strengthen compliance with regulations to protect our customers, brokers and staff so that they do not expose the wrong information to the wrong party.”

Havlik says an important aspect of this is balancing customer privacy with what an insurer is able to use from a Big Data perspective. Fortunately, this is where legislation such as the Protection of Personal Information (POPI) Act comes in. This means that while insurers have access to significant amounts of personal information from their clients, they are only able to use certain elements of that information.

Capitalising on opportunities

Call centres represent the main entry point for data. It appears that organisations are finally realising the value of data and what this can really do for new business opportunities. “Within the call centre environment there is a myriad of data outside of the mundane contact details, which have not been utilised to the fullest potential,” says Delia Gross, Executive: In-Touch Outbound, Innovation Group.

Gross says that Predictive Analytics will come to play a key role in the modern call centre due to its ability to monitor speech content to determine keywords associated with customer satisfaction and dissatisfaction. Data is gathered, and placed into a model where the predictions have been determined and the knowledge is then used to identify trends through the use of the speech analytics tool.

“These analytics will assist businesses to gear up to deliver on what their customers are expecting. The idea of customer loyalty will soon be entrenched yet again through these results by using the business intelligence gathered,” says Gross.

Nothing but the truth

“From an insurance perspective, telematics looks set to become an important pricing tool for motor insurers,” says Holden. “Only 35% of vehicles on our roads are currently insured. By promoting more efficient price policies, telematics can only benefit the underinsured market,” continues Holden.

Schliesser says, “analysing consumer data will ensure that we are able to communicate and interact with them on all platforms. We need to have a seamless ability to flick between platforms and channels; whether customers choose to engage with us face-to-face, by contact centre, email or through the app, we should be able to service them regardless. Companies that solve this challenge will go on to be the winners and market leaders in their respective industries.”

“The use of telematics will spur the development of novel products we have not even thought of yet. It will give us a new ability to price on an individual level and to understand individual customer’s behaviour in much more detail. This new generation of technology- enabled products will also improve claims management, so there are tons of opportunities in that space,” concludes Schliesser.

Quick Polls

QUESTION

The South African authorities are hard at work to ensure the country is removed from the global Financial Action Task Force grey-list by February or June 2025. What do you think about their ongoing efforts?

ANSWER

But what about the BRICS?
Compliance burden remains, grey-list or not.
End-2025 exit is too optimistic.
Grey-list is the new normal.
Too little, too late.
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