Insurers’ Role in Promoting Connected Car Data Sharing

Nathan Eddy

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4th August 2020

Making driving data available through a data exchange offers substantial business benefits for insurance carriers.

Benefits, not the least of which, is the ability to use, with proper consent, actual driving behavior versus proxy data that generally includes marital status or credit scores in the quoting and underwriting process. Driving data also creates opportunities for insurers to offer more personalized products and services to improve loyalty and consumer experiences with insurance overall.

Rohit Tendulkar, vice-president of telematics at CCC Information Services, explained telematics data exchange that ingests data from a variety of sources, including mobile, dongle, connected car, fleets among other TSPs, offers insurers a single connection to multiple streams of data. “A telematics data exchange then normalizes data, and integrates it into a range of business services and solutions including those that support underwriting, marketing, and claims,” he said. “These applications generate business opportunities spanning new customer acquisition, and friction-less claims handling.”
These can deliver efficiencies, freeing-up human resources typically spent on mundane tasks to focus on high-touch customer interactions that can drive satisfaction. In order for such a data exchange to work, the insurance market as a whole has to buy into the value proposition of such an exchange, something LexisNexis Risk Solutions CEO Bill Madison said isn’t always easy. “You’re asking the industry to be part of a shared infrastructure through a third party that has no interest per se in the evaluation of the risk itself through a pricing perspective, but at the same time be in a position to provide intelligence about the consumer driving experience,” he explained.
This completely changes the way insurers would operate because, from day one owing to the telematics data available, the insurer now has a good understanding of the risk over a period of time. “That means I can rate that driver on day one and you have to decided whether you’re going to continue to monitor the driver in a way that’s going into the repository for an extended period of time,” he said. “When you have a contributory asset, like claim history, that will be extremely disruptive to pricing models, to distribution, what to telling agents and underwriters – it’s a long journey.”

Madison said certain carriers are going to be early adopters and, if there is enough momentum, the market will buys into the concept. “Just like everything else that happens in this market, there’s a constant evaluation,” he said. “How does it improve my operational function, my risk performance, how does it impact retention, and the overall performance of the portfolio itself?”

Manish Menon, Frost & Sullivan’s team lead, chassis, safety and autonomous driving, mobility, said these insurance companies can further sell the data collected from the vehicles that are insured to various players in the auto-industry. For example, an automaker using it’s connected services might be calculating the average brake force during a braking maneuver while an insurance company might be keeping tabs on how many times the driver brakes hard.

Integrating both these data at the carmaker end allows manufacturers to predict when the brake pads need to be changed. “So, in essence, the data collected by the insurance company can be bartered, brokered or used for business intelligence depending on what data points are collected,” he said. “These scenarios have the potential to create new products in the future.”

Andrew Brown-Allan, group marketing and propositions director at Trak Global Group, noted one of the barriers to entry is cost of implementation of telematics-based insurance. “A connected insurance product on day one costs more to serve than a vanilla one,” he said. “In terms of their role in terms of propagating these solutions, they need to cultivate relationships with OEMs or third parties to transact that data in a meaningful way that delivers a business benefit.”

He pointed out that there are already lots of policy holders driving around in vehicles that collect data, but they are not aware of that fact, or do not know how to get the vehicle and the insurance company to connect with each other. “Working with OEMs is one way insurers can accelerate those types of schemes,” he said. “However, those cases are relatively few and far between. That’s really where it’s got to start, and insurers have to put their foot forward in developing those partnerships.”

CCC’s Tendulkar claimed mobile technology could be the gateway to mass adoption of telematics and other data-related insurance products for many customers. “Most consumers carry a device with them that is fully capable of delivering the data carriers need to support many telematics-enabled services,” he said. “Perhaps more importantly though, the smartphone provides the crucial link to the modern customer experience.”

Traditionally, consumers have infrequent interactions with insurance, shopping for coverage and filing a claim. Whether it’s digitizing experiences like usage based insurance, first notice of loss (FNOL), or payments, or empowering new ones like real-time pricing or crash response, mobile, telematics and AI are transforming the way insurance carriers interact with their customers.

This in turn will have important implications across the insurance provider’s organization, something Brown-Allen, Madison and Menon also pointed out. “Done right, digital and mobile customer experiences will demonstrate policyholder value, and build greater demand for telematics, which allows customers to interact across product lines, such as automotive,” Tendulkar said. “Carriers can use mobile technology to deliver a completely new, comprehensive insurance experience.”