Boom then bust for telematics?
Telematics technology such as that embraced by New Zealand’s Tower Insurance with its SmartDriver app has been touted as the future of motor insurance.
But with connected car systems and automated cars such as the Google Self-Driving car already being tested in the US, experts from analytics company Timetric say telematics could quickly become redundant.
“Drivers’ roles in driving these cars will be very limited, or even non-existent, leaving little scope for insurers to track driving behaviour,” said analyst Ben Carey-Evans.
“Innovations in connected car systems and automation in driving are expected to shorten the lifespan of insurance telematics.”
Tower, which won Innovation of the Year at last year’s New Zealand Insurance Industry Awards for its SmartDriver app, offers savings of up to 20% on customers’ motor premiums.
Customers can pitch their driving skills against their friends to prove who is the safer driver and unlock ‘heaps of achievements’ along the way.
The Timetric report, Technology in Action – A Roadmap for Insurance Telematics, said telematics had redefined the way motor insurance products are designed and marketed and still offered huge growth potential.
The British analytics company said it expected global sales of insurance telematics products to grow at a CAGR of 80% between 2013-2018, with the subscriber base reaching 85.5 million in 2018, with particular growth in the UK, the US and Italy.
Said Carey-Evans: “The expected growth in telematics insurance sounds extraordinary, but increasing interest from governments across the world, relatively low penetration rates and the product’s ability to save money for both the consumer and provider make it very feasible.”
The appeal of telematics lay in the potential for value-added services, the report said.
“Key value-added services that can be packaged with insurance telematics products include provision of driving feedback and professional driving instructions, automatic eCall (alert call to emergency services in case of vehicle collision), and bCall (breakdown call) facilities, roadside assistance, emergency services, theft-tracking, remote vehicle monitoring and diagnostic services, traffic and navigation services, fleet management, and infotainment services.”
Some countries have made the use of telematics mandatory either to improve road safety – in the US it all new cars, light trucks, vans and SUV’s sold in the US from September 1, 2014 must be equipped with data recorder systems - or address high rates of auto theft such as in Brazil.
However, rapid technological innovations in the field of connected car systems and automation in driving are expected to revolutionize driving in the future, the report said.
Companies such as Google, Volvo, General Motors, Mercedes Benz, Audi, Ford, BMW, Volkswagen, Toyota and Nissan are all investing in driverless car technology with the aim of increasing road safety and reducing the rate of traffic accidents.
Google claims to reduce the rate of traffic accidents by 90% and Volvo claims it will provide an accident-free driving experience with its new cars by 2020.
Carey-Evans concluded however: “Driverless technology is still in a development phase, and it will take around two decades for driverless cars to come to the mainstream of the automobile industry and have a significant impact on insurance and telematics.”