An exponential explosion in technological capability in telematics means that the benchmark standards required to provide a viable service will be beyond most vehicle insurers within five years’ time if they continue to “drive around with the handbrake on.”
Telematics pioneer Johan van der Merwe, deputy chairman of Coverbox, says vehicle insurance will become a two-speed market, with a small number of visionary insurers steaming ahead into a new culture of insurance, but with many stuck in the slow lane.
“There are two issues: first, technology and processes have reached such a height of sophistication that if any insurance-related organisation is operating below that level, then it is likely to be completely off the pace and consequently out of the telematics premier league, and unlikely to be able to catch up.
“A tipping point is fast approaching that will have as much impact as the change from analogue to digital mobile phones. Car insurance is on the verge of a huge step forward, and what is currently ‘wow’ will fast become outdated – but many insurers are simply driving around with the handbrake on, and haven’t gotten anywhere near considering even the current tech,” said Johan van der Merwe.
“The second key consideration is that there will be an equally big, but perhaps slightly slower, change in insurance culture which will result in cost and value changes amongst both consumers and providers: consumers will be able to prove and demonstrate their driving habits and levels of risk, and providers will charge accordingly – with a far fairer charging structure relative to a driver’s behaviour and the environment in which they drive.
“For those insurers who embrace and adopt the next generation insurance products it will mean that insurance fraud will be eliminated virtually overnight; for their customers it will mean insurance premiums that match their lifestyle and driving behaviour rather than that of their peers or neighbours.
“Within around five years, those insurers not on board will be faced with a chasm that will be simply too wide to cross.
“Currently, there are customers who get away with paying too little or face paying too much, and, what’s more, there’s no logic to the pricing structure – which creates ill-feeling and suspicion about insurers.
“We’ve been bunkered down with some of the world’s biggest insurers creating the next generation of insurance products. But there are two distinct schools: those who are on the telematics train which has already left the station, and those who don’t realise it’s actually left.”
