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How telematics is transforming the car insurance landscape

How telematics is transforming the car insurance landscape | Insurance Business

How telematics is transforming the car insurance landscape

The following is an opinion piece written by Mohsen Mohseninia, VP of Market Development, Aeris. The views expressed within the article are not necessarily reflective of those of Insurance Business.

Innovative advances in the motor insurance industry have led to the evolution and deployment of new products and services using IoT telematics, such as usage-based insurance (UBI). Globally, Allied Market Research predicts that the UBI market is expect to grow at a compound annual growth rate of 36.4% from 2016 to 2022.

The latest iteration of UBI (also known as black box or pay-as-you-drive insurance) uses granular data insights to align driving behaviours with determining insurance premiums. UBI has become more popular with drivers in the last few years and, in the UK alone, more than 750,000 UBI policies have been issued. 

Not only is UBI a popular choice among drivers to help reduce premiums, but it has also been adopted by insurers as a way to analyse driver risk. The increased access to in-depth telematics enables insurance providers to assess driver behaviour, evaluate risk, and develop customised UBI policies based on various data insights.

With this huge market opportunity, telematics companies must have a scalable and reliable solution to cater to the demand.

In order to provide accurate, data-driven driver insights that helps inform insurance providers, it is essential that telematics companies can track and collect data in real-time, regardless of location, carrier, or connectivity protocol. The current challenge for telematics companies is implementing a SIM that is capable of dealing with the high quantity of data. Companies need a SIM, with the ability to switch network providers on-the-fly, in order to maintain always-on connectivity to ensure that data would not be lost.

If device connectivity drops due to provider issues, then the device does not collect all of the data needed. Insurers are left with incomplete information and they cannot identify high-risk drivers accurately, which, ultimately, puts them in a position to lose money in pay-outs. Additionally, access to timely and robust data increases both claims efficiency and consumer satisfaction with their insurer’s management of the claims process. Therefore, reliable, always-on connectivity is a must at all times.

Constant connectivity is key to development
Telematics service provider, Redtail Telematics, currently works with Aeris, the carrier-agnostic IoT solutions provider, to collect precise, high-quality data about the driver to enable insurance partners to offer vehicle insurance based on real, rather than perceived risk.

Aeris’s global support of major cellular technology standards, such as GSM, CDMA, and LTE, means Redtail can avoid a network outage, and therefore data gaps. This helps Redtail enable customer flexibility, opening new connectivity avenues, along with the potential for growth across the globe.

The level of connectivity provided by Aeris means Redtail can provide accurate insights that help inform insurers of driver risk. The data can be used retrospectively to determine premium costs via behaviour across a six-month period, or to intervene, helping to identify where a driver could pose a risk and coach them towards better driving habits, ultimately improving road safety.

Using a SIM that provides constant connectivity, Redtail can also provide clear and concise information to both consumers and dealers at the right time. For example, it now has the ability to post alerts on OEM apps when there is a red flag around a vehicle’s battery life, stopping dangerous issues from arising by catching the problem and resolving it before it escalates.

With one of the main pressures on telematics companies coming down to cost, Redtail needed to stand out from its competitors and offer dynamic pricing that would suit the insurance industry. Aeris’s technical and contractual flexibility ensures Redtail is not charged for devices when they are not in use meaning they can offer more range in terms of price, ultimately providing them with the ability to offer differentiated solutions that match individual customer needs.

Because of this, Redtail has been able to tap into new markets, as it has the flexibility to offer affordable solutions while guaranteeing quality and accurate data insights even in poor infrastructure areas.

Additionally, Redtail can now work with local authorities and highway agencies to improve roads. Due to the granularity of the data, Redtail can inform authorities on everything from potholes that are causing driving issues to the reasons behind why people are having accidents on particular motorways. The data provided by Redtail will be fundamental to the development of the UK’s transport infrastructure.

While UBI is currently being utilised to provide more accurate data on drivers to help ensure insurers are offering the right policies, the capabilities of telematics in the industry are expanding. With access to constant connectivity and never before accessed insights, telematics companies have the opportunity to create an ecosystem that works for the driver, the insurer and the government - a way to provide a full picture on all journeys.

About Redtail Telematics LTD:
Redtail Telematics Ltd is headquartered in Cambridge, UK and, together with subsidiary Redtail Telematics Corp in San Diego, California, is unique among telematics service providers (TSPs) in designing and manufacturing its own devices―known as on-board units (OBUs)―as opposed to purchasing them from a technology provider.  Redtail’s rigorous approach to quality sustains throughout their full-service offering combining APIs, portals, raw or managed data and b2b/b2c apps.

Redtail is a leading provider of telematics solutions to the usage-based insurance (UBI), automotive, fleet tracking, and stolen vehicle recovery (SVR) sectors globally. The company draws on its joint heritage with sister company, Plextek, the communications technology design house, which has supplied more than six million devices into the automotive aftermarket in more than 30 countries since 1993.

About Aeris:
Aeris is a technology partner with a proven history of helping companies unlock value through IoT. For more than a decade, we’ve powered critical projects for some of the most demanding customers of IoT services today. We strive to fundamentally improve their businesses by dramatically reducing costs, accelerating time-to-market, and enabling new revenue streams. Built from the ground up for IoT and road tested at scale, Aeris IoT Services are based on the broadest technology stack in the industry, spanning connectivity up to vertical solutions. As veterans of the industry, we know that implementing an IoT solution can be complex, and we pride ourselves on making it simpler.