We hear the term Telematics frequently, but what does it mean? What value can it have for the average motorist and what impact will it have on the car insurance industry and on customer premiums.
What is Telematics?
Telematics in a motoring context refers to the computer and electronic technology that facilitates remote, real-time monitoring of a vehicle's location and the driving style of the vehicle owner or other parties.
Benefits to the Motorist
From a drivers perspective, the benefits of having telematics in your vehicle are numerous. Telematics technology informs navigation, communication, safety, security and could potentially lower motor insurance premiums.
Navigation - Telematics systems inform your sat nav, keep you from getting lost and help you avoid areas of high congestion
Communication – allows you to summon road side assistance at the press of a button and can automatically call the emergency services in the event of an accident
Safety – telematics technologies improve your cars safety. Lane drifting sensors ensure you don’t veer out of lane and parking sensors and assistance reduce the possibility of a collision
Security – thanks to telematics technologies, vehicles are becoming ever more secure and should your vehicle be stolen, geo-location technology can aid in its recovery
Potential to lower car insurance premiums – telematics may also allow your insurer to gain a deeper understanding of your driving behaviour and mileage covered. This may allow insurers to offer lower premiums to safer drivers that reflect their driving habits.
Impact on Car Insurance Industry
Vehicle telematics devices today can not only provide accurate, continuous vehicle speed and location data; but also straight line acceleration, angular acceleration and deceleration data. This affords insurers a far more complete understanding of vehicle usage which can provide many benefits; not only to the vehicle owner but also to other road users.
Telematics has the potential to definitively change how motor insurers calculate motor premiums as it can offer a more complete picture of a policyholders driving habits.
This could mean that in the future traditional methods of calculating a drivers insurance premium; such as experience, driving record, earned no claim bonus and type of car are gradually replaced with actual data showing how safe or unsafe a driver is.
This is great news for safe drivers and road users in general but perhaps not so great for unsafe drivers who may have cause for reflection. Furthermore, the geo-location aspect of telematics has the potential to fundamentally change car theft recovery rates. Since 2010, some 44.5% of car thefts, reported to Allianz Ireland, have been unrecovered. Telematics could potentially significantly reduce this number.
Here at Allianz
Allianz, at a global level, has been trialling various solutions with 80,000 vehicles in Europe since 2007. In addition to flexible car insurance charges, the system offers breakdown assistance, stolen vehicle tracking and recovery, and emergency/accident assistance.
Emergency assistance has the potential to be particularly ground breaking. It can be initiated automatically - such as when the built-in accelerometer detects a strong impact - or manually by the push of a button. Emergency services will be automatically provided with vehicle location and other information, as well as connected via voice with the driver. This functionality is in line with that required by the European Commission's eCall system, a telematics system that will be mandatory in all new vehicles in the EU by April 2018.
At Allianz Ireland, we believe it is the shared responsibility of all insurers to encourage and lead safer driving initiatives. In 2015, of the 166 fatalities on Irish roads, those aged 16-25 years accounted for the largest portion at 27% (source: RSA). It is our belief monitored driving has the potential to encourage safer driving habits and reduce the number injured and kill on our roads across all ages. To support this, we are currently assessing the most appropriate use of telematics which will allow us to provide value to our customers. Stayed tuned for more information on our exciting plans.
The potential applications of telematics technologies in cars are vast and we will continue to see rapid innovation as the era of the driverless car continues to approach. Here at Allianz, we are striving to provide our customers with the very best applications so that we can continue to provide insurance solutions of the highest quality.