Although insurers have yet to use telematics data to open new revenue streams, it will become a valuable asset once telematics is taken up by more than five percent of insurers, an information lead at Zenith Insurance tells ComputerworldUK.
Zenith Insurance is undertaking several data projects as its team, and data pool, expands.
It recently invested in a big data insurance management system from SAS to improve its business performance, including helping to spot fraudulent personal insurance claims. It is launching its own telematics product next month.
“The amount of data we would put together on customers in a year, we are now getting in a week,” says Jason Cabral, group head of pricing and management information at Zenith Insurance.
This influx is due to better intelligence, as Zenith now gathers information on customers as well as those who didn’t purchase insurance with the firm.
Cabral’s team records data sent from aggregator sites like Comparethemarket.com and Confused.com. A potential customer sends their information to get a quote but Zenith can now analyse that information even when the person chooses a competitor.
“It is massive volumes of data so we are using SAS analytics to bring it in, analyse it and try and improve the competitiveness of our products so we can attract new customers and keep them for longer too,” he says.
With insurance companies using standard identifiers like age and location, variables are the only indication of a customer’s driving prowess before purchasing a policy. Telematics allows companies like Zenith to learn about their customers’ driving and move away from pigeon-holing.
“Now we can actually look at why a person drives a certain way, even if they have all the underlying characteristics. Why does one person drive really well and one drive like a maniac,” he jokes.
This personalisation, which Cabral refers to as 'driver DNA', is mirrored across all industries, he adds.
“With data nowadays it is all about individualising – with telematics it is just individualising a specific quote for that person.”
Zenith Insurance will be releasing its own telematics product next month with hardware provided by Wunelli. The Co-operative Insurance group launched a similar product for young drivers where the premium paid was adjusted depending on driving behaviour.
Cabral says that despite refining its data processing, Zenith now has to expand its team as it has realised the value of its data.
"The issue is that you almost become a victim of your own success - as soon as you solve one problem another five will appear,” he says.
New revenue streams
Cabral believes that the turning point for telematics will be when manufacturers install telematics into vehicles. Car manufacturers could use big data to inform urban planning once connected cars reach critical mass, Telefonica's automotive specialist told ComputerworldUK recently.
“The situation is, the take-up rate for telematics has not been massive. But if the vehicle manufacturer’s start putting telematics in vehicles and over time everyone has it – that will be a game changer,” says Cabral.
“You could do individualised marketing, sending offers to specific vehicles. If they know you are passing McDonald’s they alert you ‘you get 50 percent off if you stop’.”
Simon Overton, banking and insurance sales manager at SAS has been watching telematics attract interest in the insurance industry.
“We have customers using SAS to understand telematics data to see which attributes have the biggest impact to see where you should be focusing and also to build a picture of what normal looks like so you can spot abnormal,” says Overton.
Aside from understanding pricing policies and fraudulent claims, Overton agrees that the next exciting big data challenge will be ancillary offers.
“The reality is where we are seeing a lot of big data projects starting in the insurance companies, is not necessarily because they have a big data challenge today, but they are looking for any area of competitive advantage they can get from the huge amounts of information that is available.
“They are making sure they are ready because telematics may not be in the mainstream today, but at some point it will be.”
The most interesting aspect of the driverless cars debate for insurers will be the transfer of liability from driver to manufacturer, Cabral says.
“We might see a shift to vehicle manufacturers taking a massive group insurance policy,” he says.
“If they[drivers] are not actually driving, is it the vehicle manufacturers themselves who are responsible?”
Call handlers at insurance firms may not be holding their breaths for their first autonomous claim, but the IoT and in-car connectivity is shaping the industry, and fast.
“It’s not going to happen tomorrow, but it is exciting. What we are seeing is a lot of vehicle manufacturers including telematics on high-end vehicles as standard,” says Cabral.