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Telematics Roundtable: How can insurers realise the full potential of connected vehicle data?

connected-car-wheels

Attendees:

  • Jemma Ashley, vice president of electric vehicles, Abacai
  • Leon Bosch, client partner – head of automotive, Partners &
  • Adam Clarke, chief underwriting officer, Ageas
  • Dominic Clayden, chief executive officer, MIB
  • Marco Di Stefano, managing Director, Axa
  • Maddy Howlett, chief commercial officer, By Miles
  • Andrew Little, head of marketing and sales, Redtail Telematics
  • Rebecca Marsden, underwriter, Apollo Syndicate 1971
  • Paul Middle, head of telematics, Tesco Bank
  • Andrew Purvis, head of motor claims operations, NFU Mutual
  • Gareth Rees, senior automotive and solutions Manager, Swiss Re
  • Nicola Richmond, head of Churchill flexible fleet, Direct Line Group
  • Graeme Stevens, data products and services Manager, Ford

Post, in association with Redtail Telematics and Ford, held a roundtable recently to discuss the potential benefits of connected car data and obstacles hindering uptake. Conducted under Chatham House rules, Valerie Hart presents a summation of the key points.

Using telematics to help motor insurers better manage underwriting risk and claims leakage has long been talked about as key to its acceptance as a mainstream product among consumers. However, the cost of black box installation and perceived unreliability of mobile app-based solutions has meant that potential remains mostly unrealised.

One possible game-changer could be insurers receiving data directly from the vehicle via the original equipment manufacturer without the need for any additional technology.

Connected vehicle data enables access to this technology without the cost of installing a telematics device. There is a simple enrolment process, with no device being posted out. With just one click, a customer can get connected and data start flowing immediately. Furthermore, the data flow can be switched on and off and as and when required, for example, before renewal.

There is also scope for far more datasets than provided by previous telematics solutions. For example, seatbelt and advanced driver-assistance systems status.

“We are giving insurers the power of new insights, enabling them to have more regular dialogue with customers to help them reduce their risk. For example, the insurer might inform them if they have more harsh breaking events or drive faster when on the phone,” said Graeme Stevens, data products and services manager, Ford.

Ford will also supply occupancy information to help insurers avoid fraudulent claims.

One attendee described how the depth of data captured these days is incomparable, and that it’s a really powerful tool as it empowers risk management both from a commercial and personal perspective.

“Whether or not one’s client is a platform operator, like Uber, or a private customer – assuming you have the data capabilities – you can build dashboards for risk. You can go into these dashboards anytime to see what’s driving road performance and claims. This helps to inform ratings and pricing, and also helps inform clients what is making their insurance more expensive.”

It was claimed telematics is mandatory on all vehicles of sharing economy operators, like delivery drivers, for insurance to be provided. Although this is quite specialist, the attendee saw it becoming an increasing trend.

“At the moment it’s offered as a carrot to consumers – you might be able to get a better rating if we can track your driving and ascertain you are driving well.”

Another contributor commented how it comes down to what’s in it for the customer and that traditional telematics works because it saves them money.

“So how can we use the data to give the customer something back? That could be premiums, rewards, or engagement in other ways. In terms of usage-based insurance, you might need to take different approaches for different customer segments. It might be pay-by-mile for certain groups, pay-by-how you drive for others.”

Safer roads

Another attendee discussed how insurers and car manufacturers are helping reduce accident frequency quite materially.

However, they warned that while gross premiums for newer cars on a total basis will reduce, the older, uninsured cars without this technology that are causing accidents will push up the cost for insurers in the levy to the Motor Insurers’ Bureau.

“We will see a crossover point where the cost of uninsured motoring is going up, so the amount you are billed rises materially, but what you can recover from policyholders goes down, and the percentage of [the MIB’s] premium is therefore higher. This could be a social and political problem.”

The attendees also discussed how the MIB could use telematics to get uninsured drivers off the road. One attendee explained how, if they could find the card that doesn’t match the insurance policy in its central records in real-time, the MIB could stop them from driving – perhaps through a ‘kill’ switch in the car.

Several participants brought up privacy concerns and confusion around getting permission from policyholders to access their data. Ford’s Stevens explained how both insurers and original equipment manufacturers request consent separately and how the customer is also notified once data starts flowing so that the process is fully transparent.

One attendee also pointed to possible issues over legal requirements around sharing of data in the event of an accident. Questions on how this is going to work – whether done centrally or on a bilateral basis remain. “When the law was written they didn’t realise just how quickly the technology was going to move,” they commented.

Lack of scale and volume

Another concern raised was the current lack of scale as the vast majority of vehicles are still unconnected. Some of the more traditional insurers present said they had been exploring how they could use the data, particularly to strengthen the customer proposition. However, one said that without mass-market scale and integration into the purchase journey, it’s difficult to see how their employer could use it.

Since Q1 2020, Stevens noted almost all of Ford’s new vehicles have been equipped with the right technology (usage-based insurance capable modems). In the UK, this equates to 250,000 to 300,000 vehicles a year. He added, that as they have built up more connected services, the majority of their customers now agree to it.

Someone else reckoned the aftermarket route – particularly with apps and windscreen devices – theoretically, provides immediate access to more volume as there are no limitations on what types of vehicles can provide data.

They suggested that, until there is a greater volume of connected cars with more readily available data, and the consent challenge is understood, take-up among insurers would be hampered.

Furthermore, insufficient policy and claims exposure time and data was raised as necessary to build a score that means something to insurers. One attendee commented that their employer had recently announced a project in Europe to collect data from connected vehicles and map the insurance implications, but it takes time to understand what that data means and how insurers can use it.

Redtail Telematics’ head of marketing and sales Andrew Little explained how it is working with insurers to validate the telematics data already available in a way that insurers recognise, and to find subsets of data that will offer the most value, such as what impacts on claims.

He argued that this is unique to the connected car proposition. However, he added it needs more of the large car insurers to work with.

One attendee discussed how an impediment to uptake comes from 100 or so motor insurers trying to engage with ‘x’ no of manufacturers, all of which have their own application programming interfaces, which is expensive and resource hungry.

The table then heard how the MIB is in talks with the industry about the possibility of a central hub, whereby it builds a certain number of APIs with the vehicle manufacturers on a neutral basis as it already has them with all the motor insurers. In effect, this would see them becoming the equivalent of “a travel adapter”, whereby an insurer would only have to plug in once to be able to access the data.

Ford’s Stevens told the roundtable how it aims to get as many owners of connected car insurance as possible. To do this, it is trying to make it easier for insurers to get data from multiple devices, from Ford’s partners and other OEMs.

“The benefit to us is that customers have a choice of insurance products from various providers. OEMs have invested hugely in connecting their cars and there’s very little payback, so we’ve got to make sure that for every dollar spent on the vehicle, the customer is receiving some value. And this is one of the best ways of providing value.”

Stevens added that Ford does not often engage with customers directly regarding insurance and does not collect the data. “We are very clear with customers on what data we do collect and for what purposes. As we sign up with more insurers and there are more products on the market, we will communicate more with our customers on their availability and benefits.”

In the background

When asked whether customers want to be bothered by their insurer, the panel suggested that the trick is for the customer not to know they are being contacted. An example is having a brand relationship that customers don’t associate with their insurer double-checking whether they are or aren’t doing something.

“Certainly, from a digital experience, if there was something useful, like gamification, that brings that customer to need to use that app, then actually they are establishing that relationship without the insurer having to annoy them.”

Someone mooted the future of insurance where people do not purchase an insurance policy, but a product with a service that has insurance embedded within it.

“It’s already being done – data is obviously critical for that, and it’s all customer-centric. It’s not about dehumanising it, but about what the customer wants. It’s not to have a conversation about insurance. That is why the data is so exciting as we can do that in the background, and the customer is presented with a really good journey.”

“There may be some questions the customer will have to answer, but, assuming everything is enabled, they are good to go with whatever product they’ve purchased. They don’t have to give it a second thought. That’s the future – not just for cars, but for everything.

“There needs to be a shift in approach to underwriting in that we look at it from a data perspective because that enhances the customer experience and makes them ‘sticky’ because insurers want sticky customers.”

Product-liability

One of the attendees wondered about the level of responsibility vehicle manufacturers and insurers have regarding all this data, and whether motor insurers could face some product-liability issues. They cited how this has already generated significant discussion in the US where there have been lawsuits, for example, because someone didn’t want to record a faulty petrol tank.

“If you have that much data and are giving real-time tips to customers, and you know an accident has a probability of happening, what’s your responsibility if you don’t stop it? When you have the knowledge, someone will say you could have predicted this.”

They believed there will have to be some sort of agreement made or standard established on how data will be shared.

It’s still early days on how connectivity can improve the claims process. It’s predicated on the whole journey being super-slick. It was agreed telematics has the potential to make things quicker and provide better information and integration into online journeys.

One attendee commented on the difference between customer appetite at the point of claim and how the insurer would like things to work. “We want a quick digital claims experience, but – for customers – an accident can be very emotional. Connectivity has the potential to streamline and speed up the claims experience. But what we have to consider is how to keep the human element and reassure customers.” Little added, “Combining quick and accurate telematics data with the right human support for the claimant can be a very powerful offering.”

Many customers don’t understand if they have a connected car. So, for some attendees, making customers aware of how it works, and its benefits is a key step. Someone highlighted how black boxes are associated with big brother watching them, so it’s important to change that perception and emphasise what can be done with that data.

Stevens argued the importance of positioning the data around how it helps the customer in defending their claim: for instance, in that they can get immediate assistance since the accident’s location can be pinpointed exactly, or the data can corroborate they were doing the right speed, wearing a seatbelt, and driving on the right side of the road.

“We can use this technology to make the process much slicker and smarter. Telematics is a positive thing for the auto insurer and OEMs. So now we need to communicate the value and opportunity to the customer.”

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