Yesterday I was caught in a whole day presentation of the use of technology in the underwriting of personal lines policies – motor, health and householders insurances. Today I came across two articles concerning the use of telematics or GPS location-based data in determining motor insurance premium to be charged…. of course this remains to be seen; perhaps a better bet in 2016, the year where Malaysian is expected to see the existing motor insurance tariff being gradually removed.
With the imminent motor insurance detariff process starting in 2016, insurers are now eying this telematics method of underwriting of motor insurance – main objective is with a view of getting at those “hard-core” good drivers and thereafter to determine how much premium that they could reduce for them to continue staying as loyal policyholders.
I am not sure if you are as sceptical as I do about this whole episode, but I would think many of you especially those marketers and underwriting practitioners…. this method is still a new thing for Malaysian and with the current low average premium base, this telematics practice may not go far. There is really not much motivation for both insurers and policyholders to consider this telematics realm – firstly, if insurers did garner enough motivation to use this method of discounting to buy a loyalty stay for policyholders who are deemed better drivers and secondly, do those targeted policyholders really see motivation in those small discounts? Given the fact our average premium being one of the lowest in this part of the region…. more discounting may translate into a mere “skinning the cat” a little bit more!
Anyway, I have posted the two articles here for your reading pleasure – just geared up your understanding for I may just continue writing this telematics thing a little bit more in the coming days…(hopefully!). Enjoy!
Malaysia: Data logging with an eye on reducing insurance premiums
Posted by: Ayisy Yusof at http://www.cbt.com.my/data-logging-with-an-eye-on-reducing-insurance-premiums/
CAR makers are taking the connected car seriously if examples at the ongoing Paris Motor Show is anything to go by..
From Peugeot to Volvo, new cars come with touch-screens, computers, telematics, sensors, and internet connectivity.
For supporters of connected cars – among them mobile operators and technology companies such as Google and Apple – the future cannot come soon enough.
However, the lifespan of automobiles, unlike mobile phones, is measured in decades, not months. No amount of fancy gadgetry will convince someone who has a new car to upgrade in a hurry.
Most cars on the road today are fitted with an on-board diagnostics, OBD II port, which can spit out a wealth of information about the car’s performance, including distance driven. Plug in a third-party device and it can harvest all that information.
Enter Telefonica, a large telecom company, which operates in Europe as O2. It has another use for the port.
It offers drivers in Germany a device that includes a SIM card, a GPS chip, and an accelerometer, and fits into the OBD II port.
With a companion app, it gives customers some of the benefits of a connected car, including the ability to monitor its performance, its location, summaries of driving performance and fuel cost, and suggestions for cutting down fuel use.
The chief benefit is that it corrects what Pavan Mathew, O2’s head of connected cars, calls the “asymmetry of information” drivers face when they take a car to the service station.
“Look under the hood of most modern cars and you will be hard pressed to identify what part does what. As a result, drivers suffering a fault with their cars must take the word of the garage or dealership when they say something is wrong with it.
Being able to see what’s going on under the hood on your smartphone allows a better relationship between consumer and vehicle,” says Mathew.
O2 is starting in Germany, where it reckons some 43 million of the 65 million cars on the road have an OBD port, with plans to expand to other European markets.
In the US, the insurance company Progressive offers a device that tracks drivers’ performance to save them money on their car insurance.
Telematics-based insurance, as it is called, is popular in Italy and the United Kingdom.
In the long run, O2’s plan is similar to Progressive’s: once customers become comfortable with tracking their own driving patterns and behaviour, it is the logical next step to offer them a chance to share that information with insurance companies.
Thailand: Bangkok Insurance to be first to use auto telematics
Source: eDaily | 03 Dec 2014
Bangkok Insurance (BKI) is set to be the first Thai insurer to adopt telematics to cut its motor insurance losses from risky segments such as young drivers and commercial fleets, especially as trucking becomes more important under the Asean Economic Community (AEC) which will be formed next year.
Mr Panus Thiravanitkul, President of BKI, said that the telematics system is expected to launch in April, reported The Nation newspaper. Telematics is the use of telecommunication and other technologies to track driver behaviour, including speed, as well as the location of the vehicle and other useful information.
BKI’s goal is to promote safe driving, which it hopes will lead to fewer insurance claims. For a start, the telematics programme will be offered to young drivers, who are regarded as a high-risk segment.
Commercial truck fleets are also considered as high-risk, and therefore the company has not pursued this category of business much. However, it believes telematics will lower the risk, and so it intends to increase its focus on this segment.
Mr Panus said that in the first phase, the company targeted only 10,000 telematics units, mostly for commercial fleets. But once the technology is in general use among individual customers, BKI hopes to slash the motor insurance loss ratio by 10-15 percentage points from the current level of above 60%.
BKI will bear the cost of operating the telematics system, which it says will not cost its customers anything. The firm will absorb the cost as it wants to educate the market on the value of the technology.