Broker is targeting product at less experienced drivers

AA Insurance will launch its telematics product next month on Confused as research shows the technology is becoming increasingly mainstream.

In November, Insurance Times revealed AA’s plans to launch on a price comparison website. This week it confirmed that customers can buy the product from Confused or direct from the AA’s own website. The broker is in talks to launch on another aggregator as well.

The scheme will be underwritten by Groupama, Markerstudy and Sabre, with the telematics ‘black box’ provided by Wunelli.

The AA aims to sign more insurers to the scheme in the coming months and also wants its own in-house underwriter on the panel, AA director Simon Douglas said.

The AA scheme would initially focus on less experienced drivers, where Douglas said the AA’s panel could be most competitive on rates. The AA also wants to restrict the number of telematics policies sold to a total of 30,000 this year and is targeting pupils in its driving schools.

The black box will monitor and record driving speed, braking intensity, cornering, location and time. Within three months of selling a policy, the insurers would have enough information to be able to adjust the premium price.

The AA will get a commission from insurers for every policy sold through the scheme.

“We’ve got a fair degree of interest,” Douglas said. “The only insurers that aren’t interested are only not interested because they’ve got a specific route into the telematics market through a direct arm or another internal business they work with. Broadly, everyone is interested in telematics.”

His contention is backed by a report by research and advisory firm Celent, which says telematics take-up will become mainstream as technology costs fall, privacy concerns wane and regulations become supportive.

According to the report, Telematics-Based Insurance: Has Its Time Finally Arrived?, the cost of installing and operating the telematics black box is a barrier to wider adoption.

But the price is falling. Actuarial consultancy EMB said that the cost of making a typical telematics unit was £300 in 2003, £50 in 2008 and will probably only be £8 in 2013.

The Celent report says that more than 50% of the top UK property and casualty insurers have a telematics insurance programme in place. Celent insurance group senior vice-president Catherine Stagg-Macey said: “There are weekly announcements. Some big names are placing their reputations on the line.”

Talking points …

● Early telematics pilot programmes by Direct Line and Aviva were axed partly because of a lack of consumer appetite for the technology. Is this attitude still widespread and, if so, how will insurers tackle it?

● The list of insurers with UK telematics propositions includes Direct Line, Groupama, Markerstudy, Sabre, Ageas, Provident Insurance, Equity Red Star, The Co-Operative Insurance, Catlin and Allianz. Who else will join?

● Most products focus on young drivers. When will telematics insurance become more viable for other age brackets?