During the past year we shared numerous discussions on the importance of insurance telematics and how technology can be used to calculate more accurately insurable risks. We have also discussed the pro’s and con’s, with the only negative being the general criticism to potential breaches in privacy etc.

There are so many benefits that many insurers have gone ahead in successfully implementing these “black boxes” inside vehicles. Consumers have also come to a much clearer understanding that sharing their driving data with their insurers could reduce their car insurance premiums – a benefit which in these challenging financial times far outweighs most of their privacy concerns.

It is important to note that the manufacturers of this technology have been able to develop newer more affordable technology which can now be used in passenger vehicles at much lower costs than years gone by when it was more limited to the fleet management and logistics industries.

Impact of European Decision on Gender Discrimination

Insurance telematics may be the unintended beneficiary of the decision by the High Court in Europe with regards to gender discrimination in setting insurance premiums. The High Court has found that insurers in Europe will no more be allowed to use gender alone as the criteria to differentiate between the genders in setting premiums. This has a significant impact on especially car insurance premiums where women were always offered lower premiums than their male counterparts.

Insurers believe that the benefits of insurance telematics, and especially the ability to provide scientific proof that the premium is calculated according to driving behaviour, will allow them to hold on to their insured female drivers by keeping their  insurance premiums affordable.

This was discussed in more depth in an article titled “Auto insurers in Europe may use black box technology to set rates”. I would like to quote a few important points from this article:

  • It has been revealed that Britain’s biggest motor insurer, Royal Bank of Scotland, is among those testing the technology.
  • “There’s a renewed interest, not least because of the gender directive,” said James Rakow, insurance partner at consultants Deloitte.
  • Using telematics to set premiums according to customers’ risk profiles allows the industry to keep offering lower insurance quotes to most women while staying on the right side of the law.
  • By making explicit the connection between safe driving and cheaper insurance, telematics could also encourage car makers to offer cheap coverage as an incentive to buy vehicles fitted with extra safety features, encroaching on insurers’ territory.

Vehicle and Insurance Telematics in South Africa

It is clear from the above that 2012 may be an important year for both insurers and the companies developing vehicle telematics solutions. It will also be important for car owners to take a closer look at the technology on offer and how this could help them to keep their insurance premiums at affordable levels.

In South Africa insurers have been active in including telematics in their insurance offerings. Also have a look at the following posts:

Vehicle and Insurance Telematics

Vehicle Telematics, Accident Investigation and Fleet Management

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

For some info in Afrikaans also view:

Is versekering “telematics” die pad na goedkoper motorversekering?

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