Rob Prime reports from the world’s largest telematics insurance conference – Chicago.
‘The afternoon was mainly taken up with technology companies promoting their various devices’, says Rob.
‘There are a lot of companies pitching at the medium to small insurance companies because they sense panic in the market – a panic induced by telematics.
‘These companies produce devices – apps, dongles – there’s a lot of talk about dongles here – and the supporting data capture and data processing capability. In short they are able to translate a critical range of driver behaviours into the effect on claims, costs, profitability and premiums.
‘For example, one firm can show how excessive breaking – that is too rapid deceleration – can, through the use of a clever algorithm, be translated into a driver accident profile – the heavy use of the break, say 50 times or more over a preset period, can reveal a driver more likely to have an accident and more likely to generate an expensive claim. This calculations can be made with a startling degree of accuracy’
Panic in the hall
The problem for the small insurer is that it is seeing more and more of its careful drivers – the ones who drive the furthest miles and generate the fewest and least expensive claims – being attracted to the larger firms offering telematics products. The small insurers see this as spelling disaster, they are being left with the least attractive propositions – ‘I get a sense they are really being freaked out by this,’ noted Rob, ‘but may be, in my view, a bit unrealistically.
Young driver discrimination
‘Some delegates were quite clear – if they could avoid offering young drivers insurance they would. I was told that they only took on the young driver in order to recruit the rest of the family to their books – that is, those members of the family who are likely to be the least risk.
‘My view is you can’t tar all young drivers with the same brush – OK the aggregated figures are there – the big, expensive, and in human terms tragic accidents – involve young people. But not all young people – I get a feeling that telematics can sort this out.
‘But the equipment manufacturers are also building data handling into their products – they tell the smaller insurers they don’t have the capability of handling the data and so will do that for them – all at a cost of course.’
EU – Italy and UK
There was an interesting, but short look at what is happening in Europe. ‘There is the perception that telematics is big in Italy. Why?
‘The answer is to do with fraudulent claims. There appears to be a big issue with this in Italy. Telematics is able to dramatically reduce fraudulent claims – because the devices can reveal exactly which car, at what time, in what position, at what speed, owned by whom was involved in the accident claim.’
The UK seems to be revealing a different trend – the use of telematics to promote good driving making the roads – and thus the general public – safer.
Rob Prime at the conference – Jonathan Coe reporting.
Follow Rob’s reports here – Thursday morning session report following soon.