Connected Car Insurance Future Trends
Insurers Must Accommodate Emerging Data Sources in the Global Telematics and Connected Car Insurance Market
There’s no denying that connected car insurance and automotive telematics have taken the world — and especially the highly competitive automotive insurance industry — by storm.
But there’s one thing that many insurers are failing to consider in their quest to satisfy customers’ demands for connected car insurance/UBI (expected to grow over 140 million subscribers globally by 2023) and create the best usage-based insurance policies: multiple sources of data.
Big Data is at the heart of any connected car or usage-based insurance program. It’s the information about driving behaviour, driving time, and driving location that helps automotive insurance companies determine a more accurate (and fair) premium for their clients. It’s what is helping setting automotive insurers who embrace UBI apart from their competitors and it’s what’s giving many insurance customers a cheaper way to buy insurance.
But a new report from telecommunications firm Vodafone shows that too many automotive insurance providers are failing to take advantage of all the data available to them. In their report, which is called “On the Road Again: The Evolution of Car Insurance,” says that not enough insurance companies are preparing for upcoming changes in the automotive industry, including the development and distribution of self-driving and semi-autonomous vehicles.
Stephen Appt, the author of the report and a specialist in autonomous vehicle regulation, says that most current usage-based insurance policies focus overwhelmingly on the driver, including their accident history and their driving behaviour (as analyzed through the collection of telematics data).
But are insurance companies prepared for a time when it may be the vehicle, and not the driver, who needs to be monitored? The Vodafone report suggests that may not be the case, and that could lead to a serious disconnect between reality and the telematics-based reports produced by insurers. According to Appt, insurance companies committed to UBI must act now to prepare for the tidal wave of change brought on by the rapid introduction of semi- and completely autonomous driving technology. Appt feels this will require many insurers to adopt more complicated hardware and software that’s capable of reading a different type of risk — the risk posed by vehicles themselves, rather than their drivers.