Most people stick with their driving styles, seeing little reason to change. A growing number of companies feel that data gathered using telematics systems can show drivers how they might improve safety or otherwise benefit from changing their behavior.
Telematics systems can gather data on speed, braking, location, and other information that can be used to reduce risky behavior. Some providers feel that, if they can offer high risk drivers a chance to lower their insurance rates by letting insurers gather information from their vehicles, they can reduce the number of accidents.
“The carnage on roads by people under 25 is extreme. If that can be reduced substantially, society will greatly benefit,” said Mark Grant, Business Development Director at InsureTheBox, an independent English service provider. “If teens see that safer driving saves them money, it can make a huge impact.”
Any vehicle with a telematics system should have the capability to collect the necessary data. That will make it fairly straightforward to offer services, according to presenters at the recent Insurance Telematics conference.
“To have an insurance policy based on driver behavior, you have to have GPS data and you need to know speed data and corresponding speed limits,” said Alba Dobi, Telematics Sales Manager for Magneti Marelli Sestemi Elettronici. “”You also want data from accelerometers for claims management and loss prevention.”
Some companies have already begun marketing programs, focusing on fleets. Fleet owners have strong incentives to track driving habits, and drivers have an equally strong motivation to respond to suggestions.
“Our success has been with self-insured fleet; they’re motivated by their pocketbooks,” said Todd Follmer, CEO of Inthinc, which provides tracking systems designed to improve driver behavior. “Drivers will alter their behavior to maintain their jobs.”
Insurance companies say that gathering this type of data will help them show customers why their rates are set and what behaviors are costing them money, which could prompt them to drive more safely.
“Today, people don’t know how their rates are set,” said Mike Slattery, Consumer Innovation Manager for Liberty Mutual Agency Markets. “We want to help them understand that. If they have behavior deemed risky, this will help them change. That gives customers a proactive role they haven’t had before.”
He added that, when accidents occur, telematics data could be used to cut legal costs. “Nobody wins when litigation is drawn out,” Slattery said. “If you can use telematics to close a claim, there’s a lot of benefit for everyone.”
When legal issues are involved, insurance companies get skittish. Some observers feel that insurers will want to ensure that telematics systems can’t be tampered with.
“A user-installed box is not acceptable to insurance companies or regulators,” Grant said. “They’re concerned that customers could alter the box or unplug it.”
In the short term, many of these driver-monitoring programs use dedicated hardware. But as the telematics industry matures, it’s likely that a single telematics system will be used for multiple functions.
“Over time we’ll see a convergence with platforms running multiple applications,” said Roger Dewey, CEO of M2MV, a consulting firm. “Now you’ve got a fractured situation that’s got to play out.”
Most insurance companies plan to begin their telematics programs by simply collecting mileage data. But they are anxious to get even more data so they can see how fast cars are driven, among other details.
“How the vehicle is driven is the golden nugget,” said Richard Smith, Director of Auto Product Management for Liberty Mutual Agency Markets.