How Insurers Can Use Telematics Technology – Grape Up

As technology is evolving in the car insurance and data-defined vehicles markets, the generational cross-section of people who use them is also undergoing transformation. Currently, two generations, in particular, are coming to the fore: Millennials and Gen Z. They are interested in service and product offerings that are as personalized and tailor-made as possible, rather than generic.  Adding to that the rapid development of vehicle connectivity, now is the perfect time for insurers to roll out and scale up their telematics products offer.

Based on research by Allison+Partners, consumers within the youngest generation view the car simply as yet another life-enhancing device. What’s more, about 70% of Generation Z consumers don’t have a driver’s license, and 30% of this group have no intention or desire to get one. This makes them more interested in carpooling using an autonomous vehicle. More than 45 percent of respondents feel comfortable with this. Thus, “urban mobility” players such as Uber and Lyft, as also e-scooter providers and on-demand car rental services are in demand. All of these are capable of filling the empty gap in the public transport infrastructure.

There is another interesting point. Those who do decide to get a driver’s license and buy a car on their own, however, face the hassle of costly insurance. The amounts are especially exorbitant for the least experienced drivers, who in fact pay more for their year of birth stamped on their ID cards. There is even talk of the “age tax” phenomenon. Interestingly, young age does not always go hand in hand with traffic violations or dangerous driving behavior. Generations Y and Z are therefore advocating that car insurance should be reassessed, with more emphasis on personalization. 

Telematics – technology that supports contemporary society’s needs

Consumers today, particularly younger ones, expect cars to be as innovative as possible, as this directly translates into comfort and safety. Above all, personalized experiences, reliable connection, and comfort count. All this is a recipe for success in the future of mobility as a service.

Individual online services should be consolidated into comprehensive mobility platforms. This will ensure that the user no longer has to switch between applications, and autonomous driving will generate new opportunities for innovative business models.

Utilizing telematics data opens the door to improving customer experience, unlocking new revenue streams, and increasing market competitiveness.

A modular and extensible telematics architecture provides tremendous opportunities for all pro-change agents. 

This allows you to organize data handling, filter it and add missing information at various stages of processing. And it will not be an overstatement to say that in a technology-oriented information society, it is data that is the most valuable resource these days.

They can be used in all business processes, interacting with the customer experience and responding to their needs. Especially those who represent the younger generations of the future, namely Millennials and Gen Z.

Telematics platforms and the future of the automotive industry

The processed information is also used to train AI/ML models and to monitor system behavior. When you add to this the fact that they are extracted and included in real-time, you gain the added value of the rapid response. This then results in service satisfaction and sustained business performance.

On the other hand, driving data collected from various sources offer a full insight into what is actually happening on the road, how drivers behave, and what decisions they make while driving. Insurers benefit from this, but so do car manufacturers and companies that deal with shared mobility in its broader sense.
All these advantages are seemingly speaking for themselves. And this is just the beginning because the future of telematics is looking very bright. The results of IoT Analytics research indicate that by 2025 the total number of IoT devices will have exceeded 27 billion globally. For comparison, it is important to add that currently there are 1.06 billion passenger cars on the roads around the world. Specialists predict that in just these few years this value will increase by more than 400 million connected vehicles.  

What will the end customer and the insurers themselves gain from applying telematics technology in automotive insurance?

Crash detection

The real-time feature of a telematics platform allows to detect accidents instantly and take proactive actions to mitigate the damages. Car location and sensor data can be used to trigger the crash alerts, coordinate emergency services dispatch, and reconstruct the crash timeline.

Such solutions are already being implemented, for example at IBM. Their Telematics Hub enables the management of crash and accident data in real-time and with a low probability of error. The tool can distinguish a false event from a real one, generate incident reports, and evaluate driver behavior.

Roadside assistance

According to Highway England, there are over 224,000 car breakdowns a year on England’s busiest roads. That’s an average of 25 cars per hour. In contrast, in another Anglo-Saxon country, the U.S., there are 1.76 million calls for roadside assistance per year.

Roadside assistance is an optional add-on to drivers’ personal car insurance. It’s a popular service among the drivers but it needs to be further developed which requires leveraging real-time data processing. Those insurance providers that offer remote service or that minimize time spent on the side of the road are gaining a competitive advantage.

Monitoring vehicle activity allows pinpointing its location in case of an emergency. Once notified of the breakdown, assistance can be dispatched to the customer position, and the nearest available replacement vehicle can be booked.

UBI & BBI

Behavior-based (pay-how-you-drive) and usage-based insurance – UBI – (pay-as-you-drive) are the future of car insurance programs. Together with value-added services like automated crash detection or roadside assistance, they will determine the competitiveness and market share of insurance companies.
Handling large volumes of real-time data from every telematics device, like connected cars, mobile apps, and black boxes to extract crucial information and offer insights to customers, requires a robust and scalable telematics platform.

Experts point out many advantages of UBI schemes over the conventional solutions offered so far. The most important of these are:

• Potential discounts.
• The authorities and insurance claims adjusters have facilitated accident investigations.
• Drivers become motivated to improve their performance and eliminate risky driving behaviors and unsafe habits.
• Enhancing customer loyalty.
• Providing personalized, value-added services to insurance plans to serve customer interests more effectively.

Stolen vehicle recovery

The demand for targeted technologies for vehicle tracking and recovery comes in handy for insurance companies, which face the problem of issuing sizable amounts of compensation for stolen vehicles on a daily basis.

It’s not true that younger generations are fickle and unwilling to take out insurance. Generation Z consumers and Millenials accounted for 39% of consumers buying auto insurance in 2018. This figure is increasing year on year and applies not only to compulsory insurance but also to additional plans. The problem is that in many cases theft insurance offers, if there are any, are based on statistical indicators rather than actual data, for instance, the high crime rate of this type in a given area. Besides, customers are often dissatisfied with amounts based on market values that are lower than expected.

So here, too, data-driven individualization is needed, and that’s what telematics provides.
For instance, by gathering data about customer behavior, insurers can build driver profiles that allow them to set up alerts that are triggered by unusual or suspicious behavior. Another thing is real-time vehicle tracking. The alarm service can be activated on-demand or automatically, and the car establishes a connection to the operations center. It is also possible to document theft. Information detected by the vehicle is collected and then exported and made available for viewing by the appropriate people.

Telematics technology is an answer to a need, but also a challenge

The Millennials and Generation Z expect a holistic customer experience. Digital offerings must bring together a variety of products designed to make life easier and accommodate each individual’s consumer personality.

This is exactly the task facing telematics today, which is not just an incomprehensible and distant technology. It is essentially something that allows you to adapt to society’s changing service and experience-related expectations.

However, the new expectations of shared mobility, autonomous vehicles, and personalized data insurance offers are linked to new sacrifices that end customers must also be prepared to make. These include, for example, the need to share more and more data. Yet, the younger generations are already declaring their readiness. According to the Majesco survey, almost half of generation Z are also willing to share data if they see value in doing so. Questions in the survey also referred to the car and driver data-based insurance industry.

There are also massive challenges for insurers themselves, where data processing is still only at an initial stage. The technological capabilities of individual insurance companies need to be continuously developed. Ideally, driving data, and the software used to collect and process it, should not be scattered but planned holistically. This ultimately leads to the conscious use of telematics and to better management of situations requiring insurance payouts.

Grape Up helps you realize the potential of telematics by applying the automotive and insurance industry expertise to create scalable, cloud-native solutions.