Telematics has suffered from a rise in complaints to the Financial Ombudsman Service (FOS) over fairness
With rising complaints over telematics fairness, ThingCo chief executive Mike Brockman has hit back at insurers providing “sub-standard” propositions.
The rise in complaints is down to sub-standard players entering the market, argued Mike Brockman, who is the former chief executive of Insure The Box.
Brockman commented: “It is a sad fact that the reason why there are more complaints related to telematics-based insurance products is because there are more players dabbling in the market with substandard propositions.”
To do telematics well, insurers need to be aware that they are dealing with real time data and risk management, according to Brockman, and must be prepared to deal with customers 24/7.
Brockman said: “With a small number of exceptions, insurance providers have seriously underestimated the operational complexity of telematics.
“What we are now seeing is the outfall from this with providers facing increasing levels of customer dissatisfaction.
“The fundamental issue is that insurance providers have treated telematics as a niche proposition and not grasped the fact that better customer engagement has a significantly positive effect on loss ratio.”
A lack of consumer education has also had an impact on rising complaints, according to Graham Gordon, director of global telematics at LexisNexis Risk Solutions.
He placed the onus on the industry to educate and inform customers.
Gordon said: “As an industry, we need to educate consumers on telematics as an underwriting factor and how driving behaviour impacts risk.
”What needs to also be recognised more widely is all the good telematics has done in helping to improve driving behaviour, reducing road casualties and supporting access to insurance for young drivers through pricing based on their actual rather than presumed risk.
”It is important the sector recognises these factors in order to move telematics from a niche offering to the mass market.”
Data being used by companies to inform telematics propositions is an additional concern for some.
Tony Tarquini, European insurance director at Pegasystems, welcomed the fact that the industry seems to be doing a better job on customer relations overall, but picked out how moves into telematics could be a new source of costly customer tension.
“As they explore how smart home devices like Amazon Alexa or Google Home might be used for home insurance, insurers have to think about where they are sourcing their telematics data from and the quality of the provision and the data itself,” he said.
“Each individual insurer will have to work out whether they wish to originate the data themselves or get it from a third party.
“There are implications in terms of cost and quality to both those things.
“Getting this wrong could mean household insurance could compete with auto insurance for the most complained type of policy.”