How telematics mandate could whet insurers' appetites for UBI

UBI has already positively impacted road safety and influenced society but, with the passing of the law requiring all new cars in Europe to have an eCall device, opportunities for UBI are skyrocketing.

“Various factors, not just eCall legislation, are pushing auto companies to add additional compute power, sensors and services into vehicles. It’s a change that is opening a new era for opportunities,” said Aldo Monteforte, CEO and founder of The Floow.

Some early adopters, for example Renault and Nissan, have already implemented changes and are working in partnerships in order to provide an analytic bridge to insurers based on embedded vehicle sensors, Monteforte explained.

“This in itself is pushing faster adoption and, in some territories, strong governmental support for UBI. It is also impacting society at large as anonymous data can not only help transform roads but also help to predict and address urban pollution. In this area The Floow works with the European Space Agency and various national transport bodies to help use UBI data to change society for the better in general.”

According to Monteforte, this also influenced regulation in 2015 when the UK House of Commons transport committee produced a report on how telematics should influence infrastructure, planning, spending and policy with evidence based recommendations for transport agencies to work directly with Insurers and telematics data analyst firms.

“We believe strongly in a device neutral approach, meaning we operate UBI with any data-stream of sufficient quality that details the movements of a vehicle or driver.”

Monteforte explained that this gives a better perspective rather than starting from a fixed device position. It allows insurers to employ the most appropriate devices for the policyholder ranging from black boxes, OBD, OEM electronics, smartphones to any other technology.

Full UBI adoption in itself is not the end game. This is just a means to better understand and reduce mobility risk. The technology and approach must always adapt, as the way people travel and vehicles are changing across the world, having a consequent impact on risk. The future steps after UBI will be to evolve data capture and analytic capabilities to provide insurers with a permanent up-to-date determination of risk in real time that best fits the evolving transport ecosystem.

UBI is, in general, cheap to deliver to each end-user and ultimately saves costs in a number of ways for the insurer as well as the driver, however, young drivers especially can benefit financially from UBI.

“UBI offers a distinct advantage in these cases, as the analytics behind the technology provide evidence-based scoring leading to the reward of careful drivers, with the risk of the driver monitored in real time,” said Monteforte.

He explains that this analysis of driving risk powers the delivery of customised rewards, scores and discounts; benefitting the driver but also at the same time encouraging the insurer to better understand risk profiles. This goes a long way to making all roads safer for everyone.

Beyond the clear benefits of safety and cost, UBI offers a whole host of new capabilities for an insurer and, again, the end user. Such services can be very bespoke and could range from simply finding a car in a busy car park, to social network features that encourage peer review of responsible driving.

Stefan Kohlmeyer, the COO of Advanced Telematics explained that eCall has three areas: new hardware module, the mandatory eCall service and additional features alongside these requirements. He believes that security and privacy will be the greatest challenges to come with the new eCall law.

“The hardware module and mandatory services add complexity and bring additional suppliers the car manufacturing process,” said Kohlmeyer. “This presents a great business opportunity for those suppliers and vendors.”

According to Kohlmeyer, carmakers benefit because they can use their experience with eCall to introduce new services and strengthen their customer relationship, as long as they align with security and privacy laws. Advanced Telematics has recently launched an over-the-air (OTA) update solution build on open standards and specialised for the automotive industry.

“OTA Plus enables car manufacturers to update and personalise a vehicle over its entire lifetime. Usually you think about upgrades such as adding more horse power or advanced driver assistance in the future,” said Kohlmeyer. “For UBI an approach can be to limit your car and yourself to a safer driving style and to get discounts from your insurance.”