Opinion: Car Insurance Is Going to Be Driven By The Data

Data from the car and about the car will power motor insurance – it all starts with the platform. Steve Kerrigan, Senior Vertical Market Manager (Telematics and Connected Car) at LexisNexis Risk Solutions takes an in-depth look;

Steve Kerrigan lexis nexis connected car
Steve Kerrigan

By 2030 it is expected that all vehicles leaving the production line will have connectivity, feeding huge volumes of data directly into car manufacturers. This data will be key to advancing the range of services customers are coming to expect – in-car safety features (ADAS); real-time traffic alerts; and emergency assistance in the event of an accident. Already, more than 78% of new cars on sale are offered with a self-activating safety system – according to stats from the Society of Motor Manufacturers & Traders (SMMT).

This data will also will be fundamental to the delivery of usage based insurance (UBI). Think telematics insurance as seen in the young driver market but available to every motorist with a connected car – no devices, no apps – the data comes directly from the vehicle.

Insurance providers already offering telematics will be at an advantage, for others there is still time to launch and learn in UBI using after-market devices – both professionally-fitted once lockdown has eased and self-installed.

Telematics insurance or UBI has demonstrated significant benefits since its introduction – road casualties amongst young drivers have decreased by 43% since 2011, according to UK Government stats. Expanding the option of UBI to a wider audience of motorists using the data coming out or the car and about the car not only makes sound business sense for the insurance sector but has the potential to improve car safety and save even more lives.

Connected car data has the potential to tell insurers the car’s mileage which will be valuable as travel behaviours may alter, post-pandemic. It can also confirm the car’s position, how it is driven and what ADAS features are present and being activated. It offers the opportunity to deliver value added services to customers and will create new risk modelling opportunities for the whole of the sector. There is little doubt that in time, the proxies for risk currently used by the market will reduce in importance – the car will be the star in determining risk.

The question is, how can insurance providers gain access to this data in a way that is fully GDPR compliant and in a form that is meaningful for underwriting purposes?

Think about the volume of car makes and models in the UK and Europe, the number of motor insurance providers, the quantity of motorists buying insurance. How do you create any form of standardisation so that when Mrs Smith wants an insurance quote for her new Fiat 500 she can opt to share her driving score from her current car?

Or what about when Mr Smith decides to invest in a new car with the latest in-car safety features – but finds his insurance provider isn’t able to reward him for this investment because there’s no standardisation over the way ADAS is described and no data on the direct impact those ADAS features have on accident risk?

bmw electric car

It’s a major many to many problem.

The logical solution is a data platform ingesting telematics, connected car and vehicle build data direct from insurers and car manufacturers and feeding it back out to the market for quoting and underwriting. This data exchange may sound simple but it is in fact a highly complex solution and one at LexisNexis Risk Solutions we have been determined to deliver.

Here data from both car manufacturers and insurance providers will be standardised, contextualised and normalised in a fully compliant manner for use across all vehicle makes or models to ensure fairness and consistency for consumers. It means driver scoring can be delivered to the whole of the insurance market, which in turn not only benefits the insurers with greater risk insights but drivers too, who will be able to choose a more personalised mobility insurance product based on their own driving data.

Great strides have already been made to bring the insurance sector and European car manufacturers together in the connected car data exchange with FCA Italy already providing data to the exchange, and more manufacturing brands due to join this year.

The first step is providing access to standardised ADAS data via the platform. Insurers will soon be able to price policies based on the presence of these features simply by providing the car’s VIN number. At the same time, car manufacturers will be able to see what ADAS features have the most impact on their customer’s safety to help drive further enhancements. It’s a virtuous circle – data from and about the car via the platform will deliver more insight and control over risk, leading to potentially lower claims volumes, lower cost motor insurance and safer driving.

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About alastair walker 10932 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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