Standards would prevent some customers changing insurers, says Ingenie chairman
The move towards telematics data standards took a step closer this week, but some players remain unconvinced that it will create a level playing field.
Telematics firms including Ingenie and Metaskil claim the introduction of industry-wide standards would be bad news for firms whose propositions rely on collecting advanced data from ‘black boxes’.
Software firm Polaris said it aims to deliver the first set of standards by December, fixing a benchmark for recording data across all telematics boxes, regardless of which companies make or run them. The standards would make it possible for customers to change insurers and take their good driving record with them.
But telematics broker Ingenie’s chairman, Steve Broughton, said the standards risked allowing only “one-way transfers”, letting some customers switch to rival companies, but restricting others”I’m not convinced it gets over that problem,” he said.
Metaskil managing director Ian Faulkner said: “It is entirely too early to do anything like standards. I think the people who are promoting standards are the only people who will benefit from it.”
Polaris managing director Martin McLachlan attempted to allay fears by insisting the standards would support the industry’s competitive dynamic. “Our aim is to standardise those areas that do not affect how brokers and insurers compete,” he said.
“The areas of competitive differentiation - ranging from the algorithms used to evaluate driving behaviour to the speed and efficiency of the claims process - will not be prescribed by standards.”
He added that it was crucial that insurers were able to chose which elements of data they use in rating processes and to set premiums.
Biba research recently revealed that 180,000 telematics polices were sold in the first half of this year, a five-fold increase in the last two years. Ptolemus Consulting Group also predicted the number of telematics policies in the UK will reach 2.15 million by 2015, 8% of the total private motor market.
Wunelli chairman Sandy Dunn, who has called for the introduction of standards for some time, said he was “delighted” with the progress.
TIMELINE: Recent developments in telematics
5 April 2012 Co-op Insurance says telematics has led to a 20% fall in young driver accidents
3 May 2012 ABI sets up telematics committee, headed by Ageas’s Mark Cliff
9 May 2012 Coverbox claims launch of tamper-proof telematics black box that can record more data
31 May 2012 RSA joins Ageas on Ingenie’s telematics panel
12 June 2012 MyDrive Solutions launches a smartphone app to replace black boxes
12 July 2012 Biba research reveals 1,500% rise in telematics polices sales in two years
19 July 2012 Polaris hopes to publish standards by year-end
Pass notes: Telematics
Are standards jumping the gun?
Telematics is a fast-moving area and many providers say the market is still too immature. But recent figures show a massive uptake in the number of polices, which will be used in favour of calls
for standards in the best interests of customers as the numbers grow.
Can standards be useful to insurers and brokers?
Yes, standards will mean less investment of time and money is required when providers develop their solutions or when customers switch from one supplier to another, as the core elements will be agreed industry-wide.
What can firms expect when they are published?
Firms could take three to six months to implement standards. The process is not simple and will involve new methods for underwriting and rating risks. Firms
should expect a number of iterations as the technology and offerings evolve.