Will Telematics be compulsory in the future?

Insurers the world over are no doubt rubbing their hands together at the thought of black-box telematics in everyone’s vehicles. They offer the company an insight into their customer’s driving habits which were unheard of just a few years ago and allow them to not only avoid insurance fraud, but price their premiums accordingly. Drive an expensive, fast car like a boy racer? Chances are your premium is going to go through the roof. Compare that with a granny doing the weekly shop in her Smartcar and things will be quite different. But what about those that opt-out of the whole telematics scheme altogether because they don’t like their privacy invaded? They could be left out in the cold.

A lot of big insurance companies have launched their own telematics products over the past year and even more so are expected to follow suit before long. Combine that with the fact that many car manufacturers are just making it an added feature to go along with the built in entertainment and security features of the vehicle (since tracking massively reduces retrieval times for stolen cars) and chances are almost all cars of the future will have some sort of telematics system. However, for those that don’t want it, they could find their insurance premiums become too much to handle.

“There will be reasons for people opting out – perhaps because they are bad drivers, or unhappy with the privacy element, or have an old car. But they will have to accept a higher premium to insure their car,” said GoCompare’s Tom Ellis, speaking at the British Insurance Broker’s Association seminar (via The Telegraph).

He has a point too. When it gets to a point that more people have telematics in their cars and allow insurers to access it, than don’t, then it stops being worthwhile for insurance companies to offer a carrot to those that sign up and becomes more effective to threaten a stick to those that don’t. When everyone’s being tracked, those that aren’t become the real risk, not those that like to drive a bit quick a couple of times a week in their nice car. At least that’s a quantifiable danger. For insurers, those that are completely off the grid would become the new risky investment.


Telematics smartphone apps have become popular in recent years

Some think that it could even get to a point where declining to use tracking hardware, could see you refused insurance. Ofir Eyal of Boston Consulting Group, believes that within five years we’ll be looking at over 15 per cent of all drivers using telematics and that from that point on, pressure could be put on drivers to switch to the tracking system and eventually, if they don’t, they may not be able to get insurance at all.

Not everyone wants this future though, specifically privacy advocates. Emma Carr from Big Brother said: “Forcing drivers to have a telematics device installed in their car, which is capable of recording and transmitting exactly where and when they are driving, is totally unacceptable.

“There is a clear risk that once the telematics device is installed drivers will lose total control over who has access to their data and how they will use it.”

Of course telematics have proven benefits, that’s clear from many of the articles we have up here, from reducing overheads on vehicle repairs – especially in the commercial sector – and cutting back on fuel costs and insurance premiums, specifically for younger drivers. But will it be such a pleasant benefit if people are forced to take it?

What do you guys think?

Image Source: Nick Nguyen

    Jon Martindale

    Jon Martindale is an English author and journalist, who's written for a number of high-profile technology news outlets, covering everything from the latest hardware and software releases, to hacking scandals and online activism.

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