Dipping our toes back into the seemingly unending glossary of techno-terms, we thought we might take a look into the growing market of telematics.
I know, it’s a term that’s been around for ages; and many of you will no doubt have heard and / or come across it in one form or another already. But as our devices, properties, and society as a whole grows increasingly more connected, so telematics takes on a more prominent and technologically evolving role.
OK, so what is it?
Derived from the fusing together of telecommunications (long-distance transmissions) and informatics (the processing of data), telematics refers to the remote transmission of data (digital / computerised) from one device to another.
It’s an idea that’s been around for decades; the term itself first coined as far back as 1978. While the concept itself dates back further still; to the birth of GPS technology in the 1960s. With the rise of the internet, mobile technology and cloud computing, so telematics transformed, becoming the driving factor behind machine-to-machine communication and, in the present day, the Internet of Things (IoT).
In an age of digital communication and wireless connectivity, telematics technology could be used for data transference between any number of devices, for a range of analytical purposes, as well as to enable remotely accessed services.
However, head over to Google and search for the term, and you’ll find that the modern definition of telematics is overwhelmingly focused upon the automotive industry; and how it’s being employed for insurance purposes.
The Wonderful World of Vehicle Telematics
In-car (or truck) telematics is a two-way thing. In one direction, it’s the facility through which a vehicle can receive information from third-party service providers to enhance the driving experience, such as:
- GPS Navigation – Where GPS enables positioning of a vehicle, so telematics can utilise the data received to allow for pinpoint accurate navigation to a chosen location
- Traffic – Telematics enables real-time traffic information to be delivered to a vehicle based upon GPS positioning and route
- Communication & Entertainment – Utilising Wi-Fi and 3/4G technology, telematics enables delivery of services from digital TV & radio to handsfree calling, instant messaging and even, would you believe, social media.
- Assistance – Modern telematics provides assistance when things go wrong in the vehicle, offering the ability to alert roadside assistance services (such as the AA) when the vehicle breaks down; even allowing the ability to send diagnostics reports to help with repairs. If you lock yourself out of the car, it’s telematics that can end a message to the vehicle to unlock itself and let you back in.
Then, in the other direction, telematics offers the facility to gather and assess data on the way in which the vehicle is being driven; which is where things get somewhat interesting from an insurance perspective.
Data is gathered via an in-car device, and transmitted to the insurers server, while allowing the driver access to the data through their own portal (either browser or, more commonly, a smart app). All of which provides both parties detailed insight into the driving habits of the individual.
- Speeds driven on the various roads
- Braking data
- Acceleration data
- Journey time (and even rest stops)
- Types of roads travelled (monitoring motorway miles)
- Amount of miles travelled
Telematics based insurance – or black box insurance, as it’s also referred – has been around for a few years now, with take up in the industry increasing as the technology continues to develop.
It’s a technology that tends to fit into the trends of modern, digitally informed living. As we readily adopt apps to monitor our health and well-being, so the idea of monitoring the way we drive, or indeed, carry out other tasks, become the norm.
Especially if the outcome is delivery of a better insurance rate.
Because that’s really where the use of telematics data becomes so transformative in insurance. It’s ability to adopt real-time information to deliver pricing that reflects performance.
Traditional policies would be formulated through historic data: previous accidents, risks associated with age band of the customer, where the customer lives, and so forth; data that is broad and generalised. Telematics, however, individualises the analyses.
Data which can provide both driver and insurer an accurate assessment of how well they’re driving, and the relative risk they carry. It’s the moving of insurance away from predictive risks, to actual, real-time data-driven, risks. Which can be reflected in the pricing of their policy, and allowing fluctuation based the continual monitoring.
The better the driving, the greater access to better prices and products.
Our world is becoming increasingly more connected; people to people, people to device, device to device. And through these connections there’s an astonishing collation of data; gathered, stored, and automatically analysed.
It’s a thought that can lead a degree of discomfort. Do we all really want to be monitored, have every detail about ourselves submitted and analysed? That’s a moral argument that goes far beyond the realms of insurance, and strikes deep into the heart of how human culture is going to evolve in the years ahead.
But telematics isn’t going away anytime soon. The challenge will be how best to utilise the technology, for the betterment of the industry, and society as a whole.