What this means in theory is that cars will be able to deliver data – vast volumes of data - about how, when and where they are being driven.
By 2020, Gartner predicts there will be a quarter-billion connected vehicles on the road, providing more opportunities for drivers to access information, their content and stay productive while in the car. What this means in theory is that cars will be able to deliver data – vast volumes of data - about how, when and where they are being driven.
That’s exciting because currently that level of knowledge is only possible where customers have opted to have a telematics insurance policy – currently around 4 per cent of the market in the UK.
Connected cars are a first and vitally important step on the road to driverless cars. Why? Because driverless cars will work by connecting with the outside world so if businesses (insurers, motor manufacturers and market disruptors) can demonstrate that they can gain meaningful insight from the vast amounts of data connected cars will deliver – it will show that data analytics at this scale to achieve true insights and to understand risks is entirely possible.
These insights can help create a positive customer experience, which in turns benefits drivers, motor manufacturers and insurers. For drivers, the data can improve confidence in their driving, offer advice on how to improve not only their driving but the efficiency of the car, create a deeper relationship with the manufacturer and open communications with insurers.
It’s an important step in getting customers used to the idea of their driving behaviour being used as the basis of their insurance premium – something 74 per cent of motorists said they were comfortable with in a Consumer Intelligence survey commissioned by Wunelli and LexisNexis Risk Solutions.
Of course it’s not just about putting customers at ease – although that is of course vitally important. The volume of data to come from the connected car will take insurers and motor manufacturers into new territory, signposted by Andrew Jones, Road Transport Minister. They need to grasp the opportunity before the market disruptors who are already used to dealing with big data, get there first.
From an insurance perspective, the possibilities to target specific segments of the market and deliver more personalised insurance packages are limitless when you know much more precisely the individual risk of each customer. Up to now telematics insurance has been focused on the young/experienced driver to help reduce their insurance costs and reduce their risk by incentivising safer driving.
But what about the older drivers who have seen their motor insurance premiums rise? It could work just as well. There’s also the Monday to Friday commuter who uses their car perhaps a couple of times a week and at the weekend. If they also happen to be a good driver, their driving data would enable the insurer to offer a much lower premium relative to their risk.
Consider the sharing economy. Insurance based on hourly, daily or weekly usage suddenly becomes possible when you have a direct data feed from the car and more importantly the capability to underwrite the risk in real-time. Recent significant investment in Uber underlines the role shared mobility will play in the future.
At the end of the day, it’s all about creating more personalised insurance cover based on actual rather than estimated driving behaviour. But the absolute key to all this is having the skills to bring insights from the big data to come from connected cars.
There’s a massive amount of effort required to collect, cleanse, validate and score driving behaviour data – and let’s not forget, this data belongs to the customer not the insurer, not the motor manufacturer. That’s why data scientists are becoming such a valuable commodity and also why Wunelli and LexisNexis Risk Solutions, with the data analysis and motor industry expertise is positioning itself right now to help insurers, the motor manufacturing sector and consumers realise the benefits of connected cars.
Rutger van der Wall is Vice President, International Business Development for LexisNexis Risk Solutions. In this role, he leads the international efforts for all Telematics offerings as well as bringing new capabilities to the Global Telematics offering. His experience comes in part from a diverse career background comprised of domestic and international experience, exposure to product introductions in established and emerging markets, and firsthand knowledge of Telematics solutions. ?? Rutger joined LexisNexis in 2002 and advanced to his current position in early 2014 after serving for three years as VP Global Legal Software Solutions based in the US and four years as the company’s managing director of The Netherlands, Belgium, Germany and Emerging Markets like Russia, the Middle East and Latin America.