A bi-product of the insurance industry's tendency to increase motor premiums recently, has been increasing talk of solutions that can help it more accurately price risk. This month, telematics rose to the surface after it was reported that executives from some of the industry's largest companies will meet in April to discuss the formulation of a common standard for issues surrounding telematics data ahead of an expected boom in demand.
The project is being spearheaded by Wunelli chairman Sandy Dunn who is hoping to standardise the collection, verification and security of telematics information ahead of the EU gender ruling in December, which will no longer allow the fact you are a man or woman to influence how much you are charged to insure your car (or anything else for that matter).
A relatively simple concept, telematics has been a part of the industry for a number of years. The technology very loosely described involves GPS-type devices that transmit and receive data between the vehicle and the insurer, relaying information such as location, speed, time of day and so on. Insurers including Aviva, Brit Insurance and Groupama have all carried out projects of varying scale and ambition; the latter two companies towards the end of 2007. In Brit's case the pilot was designed for commercial fleets and promised potential premium savings of 15% owing to the more accurate calculations of risk that are possible from monitoring driving habits.
However, the data sharing project was immediately questioned by one of the largest existing telematics insurers insurethebox, whose chief executive Mike Brockman suggested that the sharing of customer data may not only be to the detriment of motorists but may contravene data protection laws.
It will be interesting to monitor what solutions the industry finds in this area, given that it faces the spectre of losing its ability to underwrite based on gender by the end of 2012.