Think of it. You wake up and check the weather forecast on your phone. Probably the traffic news too. Maybe you then have a shower, and all the while your smart meter is tracking your water and electricity usage to make your billing more precise. Once you’ve showered, you might turn on the TV to check the latest news headlines over breakfast.
Not only is your mobile phone consumption billed on a per-use basis, but now much of your TV consumption is too – think of the pay on demand services offered by Sky, Virgin, Netflix and others.
Why then are we still billed for our car insurance in the way that we used to be billed for our electricity or phone usage years ago? It’s based on a guess as to what your usage will be and your likelihood of a crash, with no possibility of variation based on the routes you drive, the speed you drive, or when you drive.
Take my teenage daughter. She’s away at university for most of the year. When she’s back home during the holidays she wants to be able to drive, but it’s hardly worth my while insuring her on one of our cars for a whole year when she’s not going to get more than six or eight weeks’ use out of it.
Telematics can change this. In fact, this is exactly the sort of evolution that needs to come about if telematics is going to take off in the mainstream. If there’s nothing in it for us, why would we use it? In the case of my daughter, for example, a 10% discount on her annual insurance premium is no good to me if she only needs insurance for two months. I’d still be paying way over the odds.
Today we demand more from individual transactions in the form of what we get in return for handing over our personal data. Whether that’s points, discounts or miles, we want something. Telematics propositions need to be built with this in mind.
Technology is also revolutionising the way that we pay for all these services, from biometric and digital wallets to green money and money clouds. It would even be possible to pay for transactions using entirely virtual currency, such as the one players earn in the multiplayer online role playing game World of Warcraft. It is only a matter of time before these innovations start to converge with the world of insurance.
It could be that one day we’ll have multiple providers for different and specific elements of our insurance, all enabled by telematics. Then car insurance can finally move the 21st century and you could pay on demand, or perhaps in monthly or annual instalments if you felt that was more convenient.
Let’s not forget, it’s not so long ago that we only had access to three TV channels in this country, and that now seems prehistoric. Hopefully, telematics is going to help us move to a world where current insurance payment models seem just as ancient. After all, this is just the start of the telematics and wider data explosion. It will be exciting to see where it will lead.
About the author
Chief Technology Officer - SSP Insurer Division - “I'm interested in change and the way that our solutions can drive innovation and excellence across the industry. We live in an unprecedented time of scale, where insurers’ daily interactions with their customers have gone from thousands to millions. My focus is on helping the insurance industry harness this new world and all the opportunities it brings.”More content by Kevin Gaut