Telematics-based insurance programmes continue to attract interest from insurers. However, recent developments indicate that there may be a low level of support for development of common data and technical standards to support generalized protocols for implementation.
As we noted in March, Sandy Dunn, chairman of UK-based telematics solution provider Wunelli Ltd., issued notice that he would host a ‘think tank’ of senior insurer executives to set the stage for development of “a common standard for the collection, verification and security of telematics data.”
Dunn said, “Insurers have a small window of opportunity to agree to a common data standard.” The lack of a common standard would make required data sharing difficult or impossible.. Dunn also predicted that 15% to 20% of motorists would buy a telematics policy in the next two years and added that unless the industry tackled the issue now, the reputation of telematics could be tarnished.
Seems that his insurer partners didn’t see the urgency of his initiative, and some actually saw significant downside for pioneers. Within a week of the Wunelli announcement, Mike Brockman, chief executive of pay-as-you-dirve specialty insurer, Insurerthebox, said that data standardization could remove the competitive advantage from more advanced telematics players.
Cited at the ActionClaims website, Brockman also indicated that the telematics insurance industry was still too immature for these data standards to work. “The thing with telematics is, it’s anything but standard. It is impossible at this point in time to define what a standard is,” Brockman said.
The Wunelli chairman put a slightly different spin on the cancellation of the think tank session. Quoted in PostOnline.uk.com, Dun said, “Since our launch of the common standard initiative, we have received almost unanimous support from insurers and industry bodies, which we believe negates the need for a think tank.”
At least one element of Dunn’s concern seems to be playing itself out already. Dunn said: “We need to be ready or we will face a whole host of challenges, not least the problem of cars being fitted with a different box every time the customer changes provider.”
A recent article, commissioned for the Telematics Detroit 2012 Conference and Exhibition, referred to competition between the use of embedded technology and smartphone technology as ‘The Great Telematics Battle’. At this point, there is no consensus.
The articles authors summarize the current state: “On the one hand, he says, using cell-phone connectivity eliminates the need for another data plan for the car. On the other, an embedded modem usually has better data rates and more bandwidth.The embedded modem has plenty of power, because it can draw from the car’s systems; and it can use the rooftop antenna for a more reliable connection. Yet cell phone towers are optimized for reception from a fixed point, not a rapidly moving vehicle.”
While the lack of standards will not prevent committed insurers from implementing telematics-based insurance programmes, it may cause others to slow plans for pilot projects until standards are developed.