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Insurance and the Connected Car

Growing up watching Knight Rider and seeing K.I.T.T. where Michael would continuously talk into his watch, and K.I.T.T. would drive to his rescue (through a garage door or two), or safely transport him through the night while Michael had a catch up on his sleep - only to be woken up by the local police freaked out at the thought of him asleep at the wheel, only to be foiled by his pretending to have a 'crook neck'!.

Move forward 15+ years, we now talk to our watches and cars ARE driving themselves. This futuristic TV show is today's reality and only becoming more and more real. We will be allowed driverless cars from January 2015.

The connected car is a super exciting area that many folks already talk about in great detail. In fact, in Capgemini's Car's Online study - presents a compelling case of how:

'generation connected' are confident about what they want and how they want it, secure in using technology to increase their power as car shoppers and owners, and comfortable driving innovation in the industry.

It's too easy to jump to telematics when you talk about connected cars, so a quick summary from me would include the following:

  • Safety - by default, car capability increases beyond recognition. Humans no longer in control of the car (especially as the car will react quicker than we ever would). By 2015, all cars in Europe must be equipped with eCall, a system that automatically contacts emergency services and directs them to the vehicle location in the event of a serious crash
  • Fleet knowledge and efficiency - knowing when to roll vans/cars/trucks across what roads
  • Intelligent GPS - bye bye theft, traffic jams and other inconveniences
  • Location based services - working out the best things for you along the way including charging points for you and your car!
  • Infotainment & more - never be out of touch, it's all connected to your bio metric enabled smart phone. Your finger print not only unlocks the phone, but tells the car who is driving and sets your profile, routes and other preferences

Of course there is far more to it than this, the key here for me - it's an unprecedented volume of data for us to derive insights from. There is a good summary from Direct Line in the UK here. A 12 month pilot for example gathered over 11m miles of data.

It's nothing new!

One of my frustrations is that everyone talks about Telematics as a new shiny thing. Like GPS, Telematics has been around for more years than I care to recall - however it has only just found its feet in the mainstream marketing and minds of the consumer, primarily due to plummeting technology costs of the 'black box', smart phones that can do the same (or similar) and most importantly - a problem to solve - the increasingly high cost of insurance. I also use the word mainstream carefully, it's talked about a lot - with adoption in some key demographics (young drivers). Whilst it has applicability across a great many other demographics - the number of actual policies is still relatively low compared to the total number of policies in force for any one insurer. I do however believe this will change! - not because of the desire to reduce the cost, more about the way in which we move to buy everything as a true utility or service.

This was debated at a recent roundtable discussion by Post Magazine which I participated in. However to drive significant adoption, it may need a more fundamental change. Perhaps a change in law from opt-in to opt-out? - it would certainly give governments the opportunity to truly consider road charging properly!

Let's be Blunt!

The Connected Car brings so much more and is yet another blunt instrument providing oodles of data back to organisations that allow you to use it. As in most of these cases, there is always a pioneer and in the world of motoring, it's usually Formula 1, followed quickly by Mercedes in the consumer markets before it then filters down to other manufacturers. As an aside, there are some great videos here on data in F1 here and here - the difference being, soon this will be available to all of us, on our phones. F1 is a world where hundreds or thousands of changes are made to the car during a race to increase performance and the team's chances of winning. It's all data driven. Imagine now if that same logic could apply to your everyday commute. Extend the life of your car, specific parts, avoid accidents and congested roads, get cheaper petrol. the list goes on - these in fairness are all here today and almost all through your smartphone. It's simply quicker and easier to update than the cars in built systems. Just look at the long list of features on theFord Fiesta driving experience page.

Today's reasonably priced car is a hive of sensors, features and functions. Advertising of them has moved from mpg, performance and power steering, to how it connects to the rest of your digital life, from Foursquare checkins with Mini, to connecting to your phone in every car. (A change in Law helped that specifically here in the UK to ban the use of Phones while driving) In fact, Infotainment is now seen as more important in most cases than the actual driving experience itself.

From an Insurance perspective, today this offers a great insight into not just where and when you drive, but how you drive too - therefore what risk you present to insure. We already have the ability to do some great things way beyond UBI (Usage Based Insurance) to organisations like MyDrive who compare your driving style to that of Advanced motorists. The key here being you can drive fast (amongst others) safely. In fact, go a step further - if you are a meat eater - Allianz have found in the Australian market that you are better driver than your vegetarian counterpart. Data is starting to tell us much more than ever before.

What does the future hold?

Jump forward 5, 10, 15 years - we will live in world of autonomous vehicles, car safety will have excelled beyond recognition click to tweet and ultimately motor accidents will be a thing of the past - it is a familiar story now. What or who do we insure then? The personal market with have dissolved, the fleet and commercial market will have evolved.

From a personal car perspective, I still question even the basics of car ownership. Going back to where I started this post, I remember growing up as a kid and my first ambition at 17 was to get driving lessons, pass my test and buy a car. Ask a 17 year old today in the UK where car ownership is on their list of priorities and I would besurprised to see it in the Top 10. This in itself brings a new challenge, we will no longer insure the driver and vehicle - you will simply rent your journey with a Zip Caror similar which will include a near new car, sat nav, insurance, petrol and much more. Cost of ownership or importantly running is a key barrier to entry - these new schemes, or fractional ownership could completely destroy the need (in urban areas at least) the desire to own a car and its associated financial burden.

For insurance companies, we need to decide on what or where the market will be - who we establish new partnerships with outside the vehicles - to drive new revenue streams and make the most of the vast volumes of data available about each and every journey. Of course, with this brings more questions - the most important being - if all this data is so valuable, who owns it?

Home James!

Personally, whilst I love driving, 99 times out of 100, we could probably being doing something else far more valuable when the one thing we haven't solved yet is creating more time. I wait for my autonomous car to chauffeur me around in the future!


From the movie, Minority Report, is this what the self driving car of the future looks like?



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