Our themed feature this month on IE mag is Connected Cars, so it’s timely that we publish an interview with Martyn Mathews, Snr Director, Personal Lines, UK & Ireland from LexisNexis Risk Solutions. Every insurer active in the UK car market is pausing to an extent as Corona restricts car use, but in the future we will need more understanding as regards driver and car data, to make sense of the true risk on the roads.
IE; Where are we with understanding all the data that cars and drivers both generate?
MM; This is an area of focus for LexisNexis Risk Solutions over a number of years. We continue to take every piece of data we can get – from mileage to policy history and data coming out of the car about driving behaviour.
IE; About 32% of motor policies are cancelled in the first year, do you think that PAYG cover will one day supersede the traditional annual policy?
MM; Don’t know if it will supersede, but PAYG will definitely grow. It does link to connected cars because data will make all those PAYG and pay-per-mile policies more affordable as our understanding of the data increases. We have quite a big telematics business right now and we offer services to brokers as regards data analytics. Maybe the problem historically for brokers has been that the cost of putting devices into the cars has made it quite an expensive proposition, so by 2030 if most cars leave the factory with the ability to transmit data, then insurers can start to operationalise telematics insurance policies.
Once you take away the device costs, then we can capitalise on consumer interest. Our research demonstrates drivers are progressively willing to share their data when there’s transparency and value.
As regards cancellation rates, we are also using data to understand risk better and help brokers price their products at the optimum level.
IE; Companies like Zego are offering PAYG cover to delivery riders in London and other cities, which is as high risk as it gets really. Not everyone has that need for business cover every day. But more people now have a lifestyle where they might only use their car a few times a week, or even share the use of the car with someone else. Do you think that data can help the industry offer more flexible products in general?
MM; We are always listening to our customers in the insurance market. Firstly, it’s the convenience angle; what is it that consumers are asking brokers and insurers to help them with? The usage, the price, how they can get covered easily, any time of day or night. The market is adapting to that. But the insurance provider can often keep in touch far more often with their end user. We aim to use data to offer improved communications, and if you talk to them more often – coach them maybe – then you get to a point where you can offer them other products. There’s more you can do beyond waiting for renewal time to come around.
Creating better engagement with the customer through using data makes absolute sense, for the consumer and the insurance provider. We are excited to be building an eco-system that’s new, and takes both parties into a different place.
IE; If consumers feel they are getting extras in terms of rewards, vouchers for servicing, free Costa coffee etc. then they are more likely to stick with that insurer come renewal time?
MM; Consumers are always looking for the best deal of course, but yes, if you’re building trust then you’re heading in the right direction. People feel they know – and trust – certain brands and it takes time to build that up. The additional data you can glean from connected car systems can help that process.
IE; Driverless cars are still in the future, but we are moving that way. Do you think that when car makers connect all the passengers in the car they will want to capitalise on that data, and so insurers may face a little bit of a battle to get access to it?
MM; Right now insurance is an incredibly difficult thing to do, and I think manufacturers recognise that. They’re building semi-autonomous cars now, and that technology is still taking up a great deal of knowledge and research on their part. Whoever asks the customer to share their data will have to offer something in return.
We did a presentation recently titled Insurance 2025, and that looked at how a claim might be settled then, assuming that much more connected data will be available then. Apart from the data in the car regarding speed, location, the impact itself etc. you have all the driver information, traffic cameras, maybe even footage of road conditions from drones that day and so on. For manufacturers to do all that on top of building and marketing their cars is a big leap. Perhaps for a brand like Tesla it fits their strategy better than a more mainstream manufacturer.
IE; Watched a video recently showcasing a heavy duty commercial drone which did food and online parcel delivery. It could even take a passenger to the local airport. If people can get all kinds of things delivered at home in future, and an occasional ride for business, will that inevitably reduce car usage – irrespective of the recent Corona outbreak?
MM; Yes we see more car-sharing, less ownership in big cities where online delivery is much more prevalent.
IE; Do you think that a portable consumer/LexisNexis ID, where for example I could build up a driving score from various device locations, car hire for business, social use while in my own car, could all be gathered together so that becomes the crucial factor when it comes to renewal time, not just my postcode?
MM; It isn’t a dream, there are driver scores already. The industry is definitely moving towards contributory databases. That type of service you describe isn’t something that we have now, but we are heading that way, it’s a natural extension of what we have already.
IE; We have connected data from Alexa at home, IoT fridges, doorbells etc. – insurers potentially could know a great deal about their customers?
MM; There are issues of transparency around data, so consumers will be happy about all this sharing, so long as they gave consent and they’re getting something from all that. LexisNexis Risk Solutions has created a single point of entry so we can collate everything in one place and that is important for insurers and brokers of course because you need to know as much as possible about the customer when quoting.
But beyond that what we are seeing now is a greater demand from brokers as regards the vehicle
itself. This is really exciting for us because you can have two identical cars from the same manufacturer; same colour, engine size, fuel used and so on. But underneath those basic specs the variance in ADAS systems, optional extras that consumers can add-on, plus the different names that manufacturers are using for essentially the same gadget – like say cruise control. For example, there may be over 40 different names for autonomous emergency braking (AEB) and over 20 different names for cruise control across manufacturers. Brokers and insurers need to know about safety features fitted to the car, when they were last serviced and checked etc.
IE; Ah, then you can get systems that the driver can de-activate too?
MM; Exactly. That’s where manufacturer or dealer data regarding servicing can really make a difference. It all comes down to personalising the risk, based on the hard data you have on the car itself and all its safety features.
Claims costs are rising, partly because of the cost of repairing or replacing these safety systems, so brokers really need to know as much as possible about the car. Knowing which safety options or gadgets the owner selected when they bought the car adds another layer of data too – it highlights a person’s priorities, to an extent. In its raw format, you can’t make sense of all that data, so we’ve spent time analysing patterns of claims matched to cars that various safety or driver assistance systems.
Here’s one other detail worth mentioning; you can have exactly the same safety feature fitted by two manufacturers. But the claims patterns that you see from comparable models from two different manufacturers show a distinct variance. Again, great information for insurers to know.
IE; So you might find from a Mercedes E Class to C Class, you might find that the same safety feature is used a bit more by drivers in one particular model, or even the spec – like an AMG edition?
MM; Exactly, until you dig down within the data you can’t really understand how the data translates into quotes, into the actual risk.
IE; Hazard recognition systems are perhaps the most crucial bit of tech that is going to reduce accidents in the long term. Do you think that the insurance companies could work much closer with Thatcham on how these systems perform in testing?
MM; The industry definitely does take a keen interest, and they support Thatcham in the research that they’re doing. Everything from collision avoidance to keyless entry security. This is all part of rating the risk, especially as the technology advances in the future.
There are so many facets to the way data affects the car insurance market and that is why we have built our eco-system to make sense of it all, as far as possible. Bringing it all together and validating it via real world claims information is the best method of extracting value from it all for the insurance industry as a whole.
IE; Martyn thank you for your time.