The car insurance industry is highly competitive and it is a constant battle to deliver affordable insurance products whilst also focusing on risk. More and more insurers are looking at vehicle and insurance telematics as a way to better evaluate risks – and are rewarding those drivers who drive safely in an effort to avoid incurring claims risks.
We have discussed on the car insurance blog the terms Pay As You Drive, Usage based insurance etc. We also predicted that as vehicle telematics becomes more advanced – the insurance industry is likely to include the benefits of this technology in their insurance product design.
Earlier today I came across interesting insights on the Moneyweb website in a story titled “Santam’s big-brother device”
This story featured some revelations made during the results announcement of South Africa’s largest insurer, Santam.
I would like to quote:
“If Short-term insurer Santam’s experiment pays off policyholders could get a discount of up to 15% on their premium payments.
The insurer is experimenting with a driver behaviour technology that monitors the speed, time and places an insured policyholder drives to.
The product won’t be suitable for those who consider it as a “big brother” device but will help those prepared to examine their risk behaviour on their vehicles. For those interested the product can be added on to an existing insurance policy.
“I think what’s quite interesting is we are experimenting currently with some driver behaviour technology. The device is not just to assist in the recovery of the vehicle for theft and hijackings, but it also monitors the driver behaviour. It indicates whether speed is being exceeded, whether driving takes place at an unusual time and also manages the amount of kilometres covered,” Santam CEO Ian Kirk said following the company’s interim results on Tuesday.
“That I think could innovate quite a lot in terms of being able to reduce premiums giving credit to policyholders who practice good risk management. We will phase it in over a period of time… we anticipate about 5 000 sales in the year. That is not substantial in a Santam context, but it will give us substantial coverage to see if this is viable,” he added.
The monthly charge for the product would be around R160 and people would get premium discounts of around 10-15% after a device is installed in the insured car. On the direction of motor insurance premiums this year, Kirk said there will be some selective increases depending on risk profiles, but across the board it will not be over 5%.”
It is expected that many more insurer will benefit from the use of vehicle telematics. Later this month there will be an Insurance Telematics conference in Europe where industry leaders will provide more insights on the latest technology and how this is about to change the insurance industry!