What is the problem with Telematics insurance?
What’s the problem with Telematics?
Telematics is the remote sending and receiving of information typically via GPS systems to either control or analyse information.
The technology has been used for some time in motor-sports giving valuable data to teams on the vehicle’s performance and more recently by the emergency services.
After a few false starts insurers in the UK are introducing telematic devises to policy-holders cars to assess some key areas of their driving.
A telematics device, sometimes known as a ‘black-box’ is fitted to the driver’s car, which will collect data and transmit it back to the insurer. Some smart-phone apps are also available. They will analyse the driving style and assess the driver’s risk; some even give discounts for good or improved drivers.
There are two key areas that are assessed. Firstly the speed of the vehicle; this is fairly straight forward, insomuch as the faster driver or the speeding driver is considered a higher risk than one who keeps within the road’s speed limits.
Then there is the forces acting upon the vehicle; telematics devises will take into account how hard the car is accelerated, how heavily it is braked or decelerated, how hard it corners and how quickly the cornering forces changes. The theory being that the lower the forces, the more gentle the driving style and thus the lower the risk.
So what are the problems then?
Imagine a highly experienced driver, lets say Formula One World Champion, Jenson Button want to buy telematics based insurance. Let us also consider a driver at the other end of the spectrum, perhaps an elderly gentleman, perhaps an inexperienced or very low mileage driver.
Jenson’s ability to control and drive a vehicle will not be considered, but the g-forces generated by his driving style will been seen as a considerably higher risk than the latter customer, who maybe wondering gently over the white lines in the centre of the road.
This brings us on to a further problem; the driver will be aware that they are being monitored so will want to drive a smoothly as possible. When approaching, for example, an S bend, the correct and safe way to negotiate it is to follow the line of the road. However the smoothest way through the bends, to keep the cornering and swerving forces as low as possible, is to cut the corner, i.e. To cross the central white lines.
Taking this to an extreme, lets say a vehicle pulls out from a side road into a driver’s path. To avoid the accident the telematics equipped driver must brake very hard, which won’t look good on their data analysis. If he doesn’t brake hard but hits the third party’s car, his telematics analysis records no excessive movements and the accident will not be his fault.
So telematics insurance in some cases may actually have a detrimental effect on the driving habits and safety of road users. It is therefore not to be taken as the be all and end all of risk assessment.
It is still only early days so we will watch carefully how the telematics data corresponds to claims over the next year.
What is still to be fully tested is whether insurers will release data to third party’s representatives to assist in the analysis or liability of an accident. Again, we will wait and see…