4th April, 2016

Risk Perspectives

Technology is driving Motorists in all sorts of directions

Telematics, or the commonly known term the black box, is likely to have an increasing impact on motor insurance.  It’s an interesting dynamic so we thought we would share our light hearted review on the advantages and disadvantages of this new approach, as well as road testing it ourselves.  We obtained a ‘try before you buy’ from one of our insurance partners, so that we could report back to you first hand as we believe it’s important to provide you, our clients, with practical advice.

The sensible stuff first.  There are around 1800 fatalities on our roads each year, with a further 23,000 serious injuries.  We all see the rationale behind trying to make our roads safer, and therefore we should all be delighted with advances in technology that help these statistics move in the right direction.

We had heard these black boxes are capable of amazing and varied levels of service.  Here are a couple of quick claims from some insurers in relation to their own black box offerings:

“If, like some parents you pay (begrudgingly) for your son’s insurance, then our black box will send you a text when they are speeding.”

I imagine this is going to make for some interesting family discussions.  What do you do when you receive the text? Do you immediately call your son and ask him to slow down, hoping his blue tooth hands free is working?

“With our black box tracking app you can see where your car is at all times.”

Not particularly useful if you are the sole driver, unless you have lost your machine in a car park and not good, if you like to stop for a very quick ‘orange juice’ on the way home from work.  In actual fact, this App allows your every move to be tracked, with a historic analysis available if you decide to pretend you have worked late at the office!

Anyway, ignoring the claims, we hired a normal small black box.  Its’ sole purpose was to help the policyholder improve their driving and reduce their costs.  Now that sounds logical!  Aviva have taken the view that the best way to promote the use of their black box is to promote driving efficiencies amongst friends and families.   It will be interesting to see if it drives away a policyholder’s alpha (competitive) spirit from seeing how much smoke can emerge from a set of tyres, in favour of a regular rendition of driving Miss Daisy, in the pursuit of clocking up free miles and being declared the best driver in the village.

This black box reported back to us in a traffic light system based on speed, time of travel, how smooth the ride was, and how sensibly the vehicle cornered.  In return for a green light the goodies on offer were extra miles for free, or a discount on next year’s premium.  This box is designed to work on an annual mileage basis.  Extra miles credited can be rolled over to next year to reduce your premium.

To fit the box took 20 minutes, during which time the engineer gave the car the once-over to check that things like lights and indicators were working properly and logged anything that wasn’t (as it happened I had a brake light out, which I subsequently got replaced.)

From that moment on, every second I was at the wheel was logged and my driving style assessed, from early morning school runs to late night petrol runs and everything in between.

Under this system, drivers are scored between 10.0 (good) and -10.0 (bad) in three key areas: smoothness, which means no harsh braking or accelerating; usage, which means trying to avoid night driving and excessively long or short journeys; and speed, which obviously means no speeding.

We kept the device in play for around 3 weeks.  Over this time, I managed to drive more slowly and eventually registered an improved level of smoothness, so much so that I had generated a 14% discount (should I keep this up) on next year’s renewal.

The question however remains.  Do the savings take the fun out of driving?  It did feel a little bit like being sat next to a policeman.  There is no doubt however that for the right type of driver, this might be a groundbreaking tool.  I’m thinking particularly where the driving type is pigeon holed, as a ‘young driver’ ‘old driver’ ‘male or female’ driver.  That means that the chances of you having an accident are assessed more accurately based on your driving behaviour, rather than being based on broad assumptions about your social group as a whole.  And with the continuing growth of smartphone technology, there is increasingly no need to actually have the black box installed, with an App being used to capture all necessary data.  Beware however that your car could soon start cutting off your phone calls, silencing the radio and monitoring the weather via intelligent windscreen wipers, as insurers look to work on the prevention of the accident rather than the cost incurred in the cure.

Hope you enjoyed our review into product innovation.  As your active Risk Broker, we will continue to review all markets to ensure you our clients receive advice appropriate to your personal circumstances.  Next month we will look at claims, in particular the claim and blame culture, and the importance of our bespoke client claims handling service.

Until next time……drive safely.