How will Google, Apple shake up car insurance industry ?
Currently, nearly all mainstream insurers that offer driver-monitoring programs use relatively expensive devices that plug into a portal under the dashboard.
Usage-based insurance programs, also called telematics, are a small but growing segment of the auto insurance business.
Developing Android and iPhone smartphone apps, in contrast, would cut carriers' upfront costs when they offer telematics insurance programs, which track policyholder habits such as mileage and braking in exchange for potential savings on insurance.
The prospect of smartphones becoming the central nervous system of usage-based insurance could disrupt the property and casualty industry, which historically has gathered its own loss data and kept that information in-house.
Google and Apple also have other advantages, including being ubiquitous in the lives of many consumers and having been accepted as big data collectors.
"Because of what Google and Apple can do, they are in the position to gather so much data, and that data may be more insightful than traditional variables," such as credit scoring and motor vehicle records, said Sandeep Puri, a Deloitte consulting director and co-founder of D-rive, the firm's auto insurance telematics business. He offered his insights while participating in a Telematics Update panel discussion titled "Big Impact Disrupters Enter the Market" in Chicago.
The balance of power in driver-monitoring programs could shift to Google and Apple if smartphones catch on as usage-based insurance policies, Puri and other speakers at the event suggested.
They also raised questions such as: What happens when, say, Google has the data about losses to insurers? Does it charge insurers for it?