Telematics: Big Brother unleashed or the way of the future?
From 1 February 2015, NSW courts can force motorists who have been convicted of high range drink driving or repeated low range offences to install mandatory alcohol interlocks in their cars. These interlocks test drivers’ alcohol levels and if they are over the limit, the cars simply will not start. These systems also randomly re-test drivers on the move as a way to prevent drivers from outsmarting the system.
All this is possible because of telematics, the science of measuring activity remotely and in real time.
If you use a smartphone, your service provider knows where you are by using telematics through location services embedded within the device. If you are a Facebook user, the app may know far more about what you are doing and where you are and have been than you realise.
It seems certain that insurance, in particular motor insurance, will be transformed by the emergence of telematics. For the insurer, telematics can instantaneously tell where and how the policyholder drives. This is valuable underwriting information but the real benefits may be much more significant. And it’s already happening.
The first product for the Australian market, Insurance Box, was launched by QBE in October 2014. This small plug in box monitors your driving style and use of your car, delivering a DriveScore and driving feedback to the driver. Given the widespread use of smartphones, the incremental cost of telematics may just be the development of a smartphone app that automatically detects when you are driving. The second to market is the recent Safe Driver App ™ launched by AAMI. For the consumer, cost is no longer a barrier, if all one needs to do is download a free app.
This technology is able to tell you if, as a driver, you have used a phone to text while driving, randomly exceeded speed limits, braked heavily or consistently driven negligently. Some will have concerns that this all sounds a bit too much like “Big Brother” taking over, while others will argue that if you are potentially putting other road users at risk, then it is a good thing if such behaviour is detected.
Telematics has proven its usefulness in many instances. In the UK, the existence of a black box installed in a car which ran into the back of a lorry exposed the three lorry passengers to be fraudsters who exaggerated a minor accident to claim for personal injuries. In addition, apps such as “Watch over Me” have been used to scare off thieves by shaking a smartphone to trigger an emergency alert which is then sent to pre-designated individuals. Apps like this allow insurers to track the smartphone user’s whereabouts right down to the building they are standing outside of and doesn’t require the user to ‘check in’ to their location.
That’s not to say that there are no significant challenges yet to be addressed. Data security is one, with breaches a constant worry for all organisations.
Undoubtedly, telematics has much to offer both customers and insurers. For customers, it has the potential to save money, provide enhanced driving safety and hence result in better claims history. For insurers, the upside is in reduced claims costs, better pricing of risks and strengthened brand and innovation.
Despite the privacy concerns, I believe the benefits are too great to ignore. In the next ten years, the use of telematics will become the norm – at best an opt out rather than an opt in feature.
 “Blackbox exposes a GBP54,000 car insurance fraud,
Nicole Blackmore, 29 April 2014, The Telegraph, UK.