Trafficmaster Plc: “Telematics is altering the way we look at automotive insurance”

Trafficmaster Plc: “Telematics is altering the way we look at automotive insurance”

What does your company do?

Trafficmaster is a leading player in the business of vehicle tracking using GPS technology. It provides a host of driving services that benefit private and business drivers, automotive manufacturers, vehicle leasers, and insurance organizations. Trafficmaster has over 20 years experience of working in the telematics industry. It has a number of technology solutions that can be adapted and tailored for various market sectors, including the insurance market.

Its core technologies and services include: fleet management solutions, including live vehicle tracking; stolen vehicle tracking; pay-as-you-go insurance telematics solutions; smartphone travel services; real-time traffic information; and satellite navigation.

What is your company’s experience in the insurance telematics market?
Essentially, we provide the telematics technology and vehicle services to allow insurers to deliver new and innovative products to their customers. We work in partnership with our insurance clients to understand their requirements, systems, and processes, to ensure we deliver solutions that meet all objectives and help our clients overcome their challenges.

We were instrumental in developing one of the first large-scale usage-based motoring insurance schemes. Instigated by Aviva, Britain’s biggest insurance provider, we helped launch the “Pay-As-You-Drive” insurance program, by developing journey reporting technology and integrating it with the back office billing systems.

The success of this initiative was reported by Robert Ledger, program director for the “Pay As You Drive” insurance scheme: “We believe this initiative is a major breakthrough in the development of more tailored motor insurance premiums, enabling us to treat all drivers as individuals.”

Since then we have partnered with other insurance companies in North America, helping them develop similar journey-based programs.

How important is telematics throughout the insurance market space?

The primary role of telematics is to provide customer parameters that have a much higher correlation with the probability of a claim than conventional ratings factors. Driven by the current economic climate, customers are starting to demand fairer and more cost effective ways to be charged for their insurance. So it is no longer just about the person’s age, location, or the value of the asset, but also about behavior, usage, and time.

Telematics solutions are the best way to collate this information, analyze it, and calculate costs. This is particularly prevalent in the motoring insurance sector, as the technology has the ability to ‘watch’ these algorithms and provide a fairer insurance solution.

Telematics is also being used to modify driver behavior. Through our own fleet management system, which is used by many large-, medium-, and small-sized organizations, we have evidence to show that drivers become more responsible knowing that the vehicle is being tracked and activity is monitored. As such, drivers don’t leave engines running while parked, saving the company money in fuel consumption. In addition, our fleet management customers have been able to argue fraudulent claims, such as a County Council that could prove one of its vans wasn’t in the vicinity when a parked car had its wing mirror taken off.

Companies have also seen drivers reduce journey times by using congestion avoidance satellite navigation. And for insurance purposes, it has encouraged young drivers to only use the car during ‘safer’ periods, such as in daylight.

Where driver behavior is seen to be a cause for accidents, speeding, or other driving offences, the telematics system can help prove who is at fault. Again, a valuable function for insurance companies!

Trafficmaster’s telematics solutions also include stolen vehicle tracking. This enables vehicles to be found and recovered, and thus helps ensure insurance premiums aren’t affected.

Which trends will impact the industry the most in the coming years and why?

Telematics technology is already altering the way we look at automotive insurance. The use of technology will help bring in new pricing structures and make insurance policies fairer, so people who drive more or who use the busiest or most accident-prone roads may have to pay more for their policy than people who only use the car minimally.

Where do you see the insurance telematics industry heading in the next five years?

The insurance market is currently evaluating and assessing how it wants to use telematics. There have been a large number of trials with some notable larger-scale roll outs. It is always difficult to predict the timing of large-scale deployment, but I would be surprised if we do not see this happening in a five-year timeframe. I think a lot of different business models will be tried out and some will definitely succeed.

As the hardware price reduces and the sophistication of telematics devices increases, I believe driving will become more safe and insurance premiums will become fairer to truly reflect the risk of a claim.

In addition we will see higher bandwidth wireless communications and broader geographical network coverage. The integration of telematics systems into vehicle diagnostics frameworks will encourage an even more innovative use of telematics, such as assisting better driving—staying in lanes and inhibiting speeds in ‘black spot' areas. This will be alongside working with automotive manufactures so that vehicle owners are automatically notified of service dates and are booked in on time through to automatically warning the manufacturers of any vehicle faults. All of this will provide clearer boundaries of responsibility in insurance claims.

For more on the insurance telematics market, see ‘Can telematics reinvent auto insurance?’. Click here

For more on diagnostics data, see ‘Should drivers have access to their diagnostics data?’. Click here

Stuart Berman is speaking at Telematics Update's 1st annual Insurance Telematics USA 2010 Conference & Exhibition. Click here for more information!

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