Telematics will make you safer and save you money – by disrupting the disrupters

 
Jonathan Hewett
Car Phone
Passengers should have the right to make an informed risk assessment about who’s going to be driving them (Source: Getty)

Telematics – the technology for collecting and analysing driver behaviour – has been transforming the face of car insurance for a long time.

Now it is set to play a key role in how people engage with market disrupters such as Uber and Zipcar.

These new entrants give people a great deal of flexibility in how they choose to get around, driven by the ever increasing cost of motoring.

Read more: How insurance is becoming part of the sharing economy

The costs associated with motoring tax and insurance have increased by 123 per cent over the past 10 years, according to the RAC foundation, while average wages increased by just 22 per cent over the same period.

With a further 25 per cent rise expected in premiums this year, according to the AA, it’s no surprise that, particularly in cities, people are looking at other options.

Now more than ever, the need to own a car in London is in question. The average London car is idle 96 per cent of the time. But you still take the same risks when you get into an Uber – the difference is that you’re not in control. As a result, there’s a growing need for greater transparency for both insurers and passengers.

Passengers should have the right to make an informed risk assessment about who’s going to be driving, and the methods of measuring this are likely to become increasingly important. This is where telematics comes in – its track record shows it improves safety and it will give consumers greater data about their driver beyond the simple background checks and passenger feedback.

Detailed driving records can also flag reckless behaviour, bring down insurance costs and settle accident disputes, as well as educating drivers on improving their habits, which means better safety for all road users.

Likewise, insuring a self-employed taxi driver is a difficult risk assessment for insurers and actuaries as there are a number of factors to consider. Some Uber drivers may spend 10 hours a day ferrying customers around, while others may only spend two. Telematics could help to efficiently price drivers depending on their activity, making risk assessment easier for insurers.

Usage-Based Insurance (UBI) is already a global phenomenon that reaches twice as many countries as two years ago. By 2020, nearly 100m vehicles globally will be insured with telematics policies, growing to nearly 50 per cent of the world’s vehicles by 2030.

According to ABI research, telematics technology, including smartphones, will drive its penetration in taxi and private hire vehicles to 21 per cent globally by 2019. Mobile technology is an easy first step for the introduction of telematics to this market as passengers connect with a driver using a smartphone app, providing the ideal means of also sharing a risk assessment through telematics.

It is also worth considering the possibilities increased data collection across the board offers. Data collected by taxi operators, for example, can be fed back to local governments.

The taxi market is already heavily regulated, and with a lot of controversy around disrupters, this data could be a crucial part of ensuring fair and efficient regulation. By partnering with data-rich new players in the market, local governments don’t need to rely on big procurement projects to make assessments around modern mobility regulation.

Technology startups have completely revolutionised mobility options in our capital. Now telematics has a vital role to play in providing the necessary transparency and peace of mind for these disrupters to continue their upward trajectory.

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