It appears that even the politicians have seen the light on the path towards affordable car insurance premiums! The Independent reports that in the UK Prime Minister David Cameron is adding his voice of support to the process of using “black boxes” as a tool to measure driver behaviour and reduce car insurance premiums, especially for the younger drivers. We would like to share some information from the story by Nigel Morris that appeared in The Independent.
It is expected that the insurance premiums for newly-qualified young drivers in Britain could be cut by as much as up to £700 (R3500) a year if ‘black boxes’ are fitted in their cars.
What are these “black boxes”?
This is not a unique device and I am proud to say that they have been used in South Africa for quite a while. These devices are an extension and refinement of technology that has long been used in the fleet management industry.
These tamper-proof smartboxes, usually installed under the bonnet, use satellite navigation and G-force technology to monitor the cars’ speed, braking, acceleration and cornering and how often they are driven at night. Full details of their drivers’ behaviour on the road are regularly updated.
Does it help young drivers?
It is important to recognise that drivers are by law required in the UK to have car insurance and that especially the younger male drivers find it extremely difficult to find affordable car insurance premiums.
Co-operative Insurance, which launched the scheme last year, said drivers aged 17 to 25 with a black box in their car were less likely to be involved in a crash. They can typically receive more than £500 (R6000) reduction in their initial premium in return for having the device fitted.
Support from Government for Insurance Telematics
Prime Minister Cameron will back calls for ‘telematics’ to be rolled out more widely across the industry.
David Neave, the Co-operative’s director of general insurance, said: “The cost of insurance has hit an all-time high, especially for young drivers who feel that they are being priced off the road.
“Many young motorists who drive safely are picking up the tab for the ones that drive recklessly. However, the black box allows people to pay a fair price for their cover, determined by how well they drive.”
Insurance Telematics and Car Insurance in South Africa
All the major South African Insurers have recognized the potential and importance of insurance telematics as the best way to individualize car insurance and provide accurate premiums based on the scientific data of how a person drives. Some of these may be more advanced than others, but there is no denying that the premiums calculated according to the very real risks you present is the way forward for car insurance!
It is well worth noting that even expertise from Formala 1 is at present used in some of these most advanced driving behaviour measurement systems. I would like to quote from a post on Insurance Chat:
“There are thousands of pieces of very precise scientific numbers and data provided by the Formula 1 Racing car to the racing engineer from which very important decisions have to be made is splits of a second. This begs the question – What if such data could also be delivered to benefit a mutually beneficial relationship between the owner of an insured vehicle and his car insurance company?
With this in mind Rory Byrne has been appointed as Special Engineering Advisor to Discovery Insure. Rory Byrne has assisted in applying his expertise in motor vehicle dynamics to develop the methodology behind the Driver Quotient™, which uses the latest motor vehicle telematics technology and proprietary algorithms to develop a scientific measure of driver behavior, the Driver Quotient, or DQ.
A Discovery Insure client’s Driver Quotient encapsulates the key measures of their driver intelligence. VitalityDrive measures the Driver Quotient based on the number of DQ Points earned and will reward safe driving behaviour!
Rory Byrne has confirmed that during his visit to South Africa several working sessions have been held with Ctrack, the vehicle telematics partner of Discovery, and there will be continuous development as more feedback from the insured clients and their vehicles become available.
Vehicle telematics technology will measure parameters such as excessive breaking, harsh cornering, speeding etc. This data, along with the traditional parameters of distance travelled, time of day travelled, area of operation etc will provide a very accurate risk profile to the insurer.
One of the biggest benefits of this advanced technology will be that drivers will be motivated to drive in manner that is safe and responsible. This will be done 24/7 and will not only reduce the financial risks to vehicle owner and insurer – but might save lives and prevent injury to other road users as well!”
The critics who have always made an argument against “black boxes” on the potential threat of privacy now has to acknowledge that not only the harsh financial reality has favoured a shift towards insurance telematics –but so too the fairness of a tool for calculating premiums based on scientific data! It is only fair that you should not be thrown into a specific risk category – if you drive safely and responsibly you should be rewarded with a more affordable car premium than the guy who simply do not care!
For more on how data from traffic flow is used in insurance products also view:
Outsurance and Safe_Driver@Out – see “Outsurance activates technology to reward safe driving behaviour”
Discovery and Vitality Drive – see “Drivers have an IQ, EQ and now with car insurance also a DQ”
MiWay and MiDrivestyle http://www.miway.co.za/midrivestyle