"Black boxes" provide the best telematics data, but new mobile apps, which perform much the same function and provide drivers with daily feedback, will spur telematics take-up in 2017 and beyond. Using these mobile apps is cheaper and more convenient for motorists and insurers alike. As use increases, insurers will obtain a broader and deeper data set that their machine learning programs can analyse, enabling this to be properly incorporated into calculating insurance premiums.
What's the latest on telematics?Telematics is now beginning to gain some momentum - we
recognise telematics is a positive development, but until now no one has had
enough data to price things accurately.
The vast majority of solutions on the market would involve
drivers being prepared to have a box in their car and in return we would give
them what amounted to a random discount in the belief the box would make them
drive more safely.
Telematics is still predominantly used by young drivers
because there's an administrative cost to insurers and an inconvenience cost to
customers so there had to be a big premium to start off with to justify going
through this hassle to get a discount.
What do insurers do with the data generated by telematics?Insurers now need to analyse the telematics data to find
patterns that we can build into our pricing. This has been really slow going,
but with machine learning we can set some parameters and let it run its own
scenarios to find those patterns.
Machine learning can do the work of more than 10 data
scientists, which is hugely beneficial because data scientists are not only
very expensive but are also very hard to hire - everybody is trying to recruit
Machine learning means we can save our data scientists and
actuaries to work on the final fine tuning of our pricing. From a pricing
perspective, the use of data from telematics is going to accelerate.
Will mobile phone-based telematics prove more popular than "box" telematics?If you have a mobile phone solution it's a really good way
of giving feedback to customers. You don't just want to measure things, if you
can nudge behaviours and influence people in the right direction then that is
also a positive way to improve safety.
Mobile phone telematics can either operate solely using the
technology embedded in the phone or it can communicate with a telematics unit
fitted in the car. The big benefit is that it doesn't just give you a surprise
at the end of the quarter that you've either got an insurance discount or not,
you can look at it and see how you've been driving on a daily basis, maybe
getting into leagues with friends and relatives.
The whole point is it encourages and rewards good driving.
It's not just trying to grab the best drivers and price them appropriately,
it's trying to improve the driving behavior of all your customers.
How widespread is this?It's becoming more widespread. The problem is that obviously
your mobile phone isn't fixed in your car and so it's easier to cheat or forget
to leave it on and the whole point of telematics is that you need data all the
If somebody forgets to take their phone accidentally or
deliberately, that's a big issue. There are solutions. There are devices that
can automatically connect to your phone or send you some signal, there are
units that fit into cigarette lighter sockets and also double up as a charger
to encourage people to use them.
They will never be as accurate as something that's
physically strapped to the vehicle but they're increasing in popularity because
of the much better interface. The number of telematics offerings are increasing
and the accuracy of the pricing, rather than the novelty marketing giveaway,
seems to be increasing.
What is the outlook for telematics in 2017?I hope to see telematics begin to move away from just the
high-risk end. Because we can improve peoples' driving behaviour we need to find
a way to appeal to the mass market. Some people are claiming that they've done
that but when you look at the numbers the reality is it's still a niche
segment. If telematics can make our roads safer we've got to be pushing it.