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Big brother is watching you

A Deloitte survey last year determined that Internet-connected offerings, such as motor telematics and home insurance linked to home sensors, cause apprehension among many customers, as they do not feel comfortable sharing data from car and home sensors with insurers. Despite this, telematics is seen as changing the way car and home insurance is and will be offered in South Africa.

“The rise of connected mobility means that soon millions of vehicles will be connected to the internet,” Netstar managing director Pierre Bruwer mentioned at the release of Netstar’s Connect Report. “Already billions of Internet of Things (IoT) devices are connected. All of these devices are generating data, and it is critical that we use this data to improve the safety and efficiency of movement and customise mobility to our needs as people and businesses. This is what the report looks at.”

Connectivity changes relationship with your car

Netstar’s global partnership with major automaker Toyota has shown how connectivity is changing consumers’ relationships with their cars.

  • Connected vehicles generate consumer data through vehicle companion apps and IoT devices that can be used to build better, safer motor vehicles and improve efficiencies.
  • Connected vehicles are the hub of a connected life with everything from work to banking to infotainment available from the vehicle’s mobile wi-fi hub, as well as brand engagement and predictive service alerts.

The next phase of connected mobility is seeing innovations around remote control, remote charging, navigation, safety, vehicle diagnostics, brand experience and insurance synergies.

Insurance Synergies

“The insurance industry has been an early adopter of technology to unlock the benefits of connected mobility,” according to the report. “Whether through connected vehicles or customer devices, insurers are now able to monitor driving behaviour and incentivise positive change.  The days of one-size-fits-all premiums are coming to an end, as clients now pay the premiums that their lifestyle and driving behaviour justifies. Health and exercise goals can similarly be incentivised and rewarded. Essentially, products are now being customised to consumer needs.”

Cover to become more personalised to risk

“Insurance product innovation has seen insurers come to market with more personalised offerings that are dynamically tailored to your exposure to risk. Examples include vehicle telematics solutions that track your driving behaviour or your mileage, and then reward you according to how well or how far you drive,” Ernest North, co-founder of Naked Insurance explains.

North shares the following example:

What happens if there are two women of the same age living in the same street? Let’s imagine they both drive exactly the same model and year of car and have a similar accident history. The first of them drives 150 km each weekday to drop the kids off at school, go to work, and check on her parents. The second is single, works from home, and only drives 100 km a week to the shops or to visit friends.

They would both pay the same premium. If the second woman uses one of the telematics products, she might get a 10%-20% discount, rewards or cashback of around 5%-20%. But her real risk is at least 50%-60% lower than her peer down the road. Post-Covid, insurers will need to revisit how they structure their products to offer more meaningful savings based on each person’s circumstances – especially with many driving less as work-from-home becomes permanent.

In 2020, various insurers predicted that telematics will be one of the top trends that will shape the insurance sector in the next decade. “There is a focus on the integration of IoT, spatial mapping technology, sensor technology, telematics, advanced analytics and AI in the short-term insurance space to deliver more granular, individual risk profiles – that’s good news for consumers looking to streamline their costs and take ownership of their risks, and for insurers wanting to offer truly personalised, behavioural-based solutions and underwriting.”

Although data privacy will always be a concern, TCF Outcome 2 states: Products and services in the retail market which are sold and marketed are designed according to the needs of the customers identified and targeted accordingly.

What can be better than having a premium determined by your actual behaviour?

Click here to download the Netstar Connect Report that uses Netstar telematics data to analyse the impact and effectiveness of the Covid-19 lockdown in South Africa; it describes the emerging role of telematics in connected vehicles and identifies emerging mobility trends.

Click here to read North’s article that also highlights other short-term insurance trends.

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