February 5, 2014

The word telematics, of course, comes to us from the Ancient Greek and means, literally, the act or process of doing things a long way away. One of the perennial concerns of insurers has been that persons they indemnify against the consequences of various eventualities go off and do things at a distance over which said insurers have no direct control. This creates what is known technically as telerhizikon (far-away risk).

Clearly, there is no way insurers can remain at all times physically present to exert a direct influence on policyholders’ behaviour, but in the world of motor insurance new “telematics” devices are giving insurers the ability to sit – if not physically in policyholders’ passenger seats – then, at least, virtually alongside them so as to keep an eye on exactly how much telerhizikon they are being exposed to.

Considerably assisted by young drivers’ reluctance or inability to afford the ‘sky high’ premiums they are now being asked to pay, insurers have succeeded in introducing such devices into around one in a hundred insured vehicles in return for premium discounts made available to those whose telematics data suggest are least likely to crash. One of the leading players in the field of far-off risk monitoring is the funnily named Wunelli who this week launched a paper called thinking outside in a box.

This white paper revealed that “crashes are eleven times more likely at 40mph than 70mph”. This seemed a bit counterintuitive to Bankstone News, but we’ve certainly been driving a lot faster since hearing it so as to reduce the risk of accidents. Another fascinating fact to emerge from Wunelli’s analysis of 764 million miles of telematicised driving over five years is that the highest proportion of at fault claims occur between 3am and 6am on Saturday nights. Worryingly, that is precisely when we’re usually driving blearily home after our usual Friday night lock-in at the Badgers.

Established providers of telematics equipment have focused on special “black boxes” that record driver behaviour in extraordinary detail. Lately rival providers and insurance companies themselves have introduced a lower-cost alternative in the form of smartphone apps that do something similar (if slightly more erratically). Black box merchants have been deeply scathing about smart phone telematics. But ultimately both camps are living on borrowed time, as major motor manufacturers are increasingly looking at installing telematics capabilities as standard.

Once this has happened, anyone resisting an insurer’s request to activate their built in telematics and share their data will clearly have something to hide and should therefore be refused insurance or rated to reflect their suspicious data caginess. Things, as that nice Mr Blair used to say, can only get better!

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