Telematics Not the Only Answer to Reducing Insurers’ Risks

It wasn’t so long ago that an automobile was a free-ranging universe all its own.

The only real connection it had with the outside world occurred when someone inside rolled down a window. The only feedback a driver would receive was the occasional angry “slow down!” from a pedestrian or rival motorist.

The situation is far different today. Even basic telematics bounce important data points to and from cars, providing information on many aspects of the vehicle’s condition and performance. The same goes, of course, for the driver and, as the scope and prevalence of telematics increases, it should play an increasingly greater role in shaping this person’s performance. So, the big question before us is: what kinds of innovations in this field can we expect in the near future that will help us improve driver skill and ability?

Incentives, for one. It’s fine that we have reams of information about how a driver can get better thanks to telematics data but according to Ryan McMahon, vice-president of marketing at Cambridge Mobile Telematics (CMT): “When it is combined and reinforced with the right incentives (insurance discounts, rewards), the effect is amplified.”

Goodies for proper driving have been a staple for years in the insurance industry, of course. Yet,  with the ever-increasing depth and sophistication of in-car commerce systems, a clever solutions provider could develop an attractive system of rewards beyond premium discounts or good driver credits. Such systems already exist, although they’re geared towards rewarding shopping rather than quality driving. The Honda Dream Drive, which as of this writing is still in the prototype/demo stage, earns a user points for making in-car purchases. It also confers points for visiting certain merchants, or for passengers logging time in one of the system’s numerous games. Employing such a platform could have a very positive effect on those behind the wheel.

With the increasing granularity of vehicle telematics, we’re gaining ever-deepening insight into driver behavior. These days, we have a great deal of insight into a driver’s habits and quirks. As a result, those at the receiving end of telematics data can form, if not a complete picture, then a very detailed profile of a person’s driving personality. It will become more critical to analyze and extrapolate this information in the most effective way possible. With this, actionable and specific assistance can be delivered to the driver in order to improve their performance. It’s not enough for telematics solutions providers to be able to drill down to the finest details possible. It’ll also be critical for them to funnel the data into the most effective, practical and bad habit-changing solutions.

With the advancing sophistication of telematics, there will be ever more differentiation among groups of drivers. “We always need to be careful here on what is classed as a ‘good’ driver,” cautions Andrew Lee, head of market and sales intelligence for solutions provider Octo Telematics. “Consumers have very different opinions of this country-by-country, to different age groups etc. This is when telematics data on its own has limitations.”

Driving is not the same experience in different continents, countries, and even regions, so details can really matter. For example, the concept of a “main road” in European nations can contrast starkly with the relatively strict light- and sign-based rules of driving in the US. Using any lane to drive on without overtaking in the US on an American freeway but strictly taboo on a European motorway where all outside lanes are for overtaking only before returning to the only driving lane, the inside one. Similarly, while driving through a red stop-light while turning right in the US is often permitted, the maneuver would be unconscionable in most European countries. So, it’ll be increasingly important for many telematics services providers to have a finger on the pulse of their national, regional and local road culture and regulations.

One caveat to all of the above, however, no matter how detailed, accurate and insightful, the telematics feedback can only improve a driver to a limited extent. There is a danger that we begin to rely too heavily on technology to attain this goal, rather than more traditional means of sharpening ability and skill.

According to Lee, this is particularly applicable to the beginning and advanced eras of a driving life. “There are stages in the driver’s learning curve that will need the human touch,” he said. “Typically, this will be early on as a learner driver needs to practically learn how to operate a car and know what to look out for. Further down the learning curve, should you want to take that next step, the human touch will once again be needed. By this I refer to advanced driver programs, learning how to drive with trailer, larger classes of vehicles, etc.”

McMahon added: “Ultimately, telematics can help with any driving behavior that can be measured with context. As long as vehicles are made with steering wheels, accelerators and brakes, drivers will need to know how to use them and understand the rules of the road.”