Anne Sheehan, enterprise director, Vodafone, explains how telematic are critical to maintaining cars’ appeal by addressing economic, environmental and safety issues.

Fewer people are now buying and owning cars, as 2017 saw the first decrease in the number of new car registrations since 2011 in the UK. They’re a big purchase to make for many people – typically paid for in monthly instalments, plus road tax and of course costly insurance premiums.

Coupled with the constant need for better road safety and the increasing focus on the environmental impact of fuel consumption and emission, manufacturers must revolutionise vehicles to keep people driving. Telematics presents a transformative opportunity for drivers and insurance companies in addressing these economic, safety and ecological challenges.

The benefits of telematics

Telematics-based insurance consists of a smartphone-sized black box that is installed in a car and works like a sat-nav or GPS. This technology enabled by IoT networks, monitors speed, acceleration, braking and manoeuvring around corners. This data can then be analysed by insurance companies to assess how safely a policy holder drives, with their insurance premiums tailored accordingly.

The benefits of telematics include four key areas – lowering insurance premiums, improving road safety, boosting the economy and benefiting the environment. The reward system for safer drivers not only lowers insurance premiums, but also impacts driving speed and road safety by naturally rewarding safer driving. Research has shown that telematics has resulted in a reduction of “safety-relevant events” of up to 76% in young drivers.

These positives extend to the economy too, with telematics policies resulting in savings of £160m (€176.6m) in premiums in the UK last year.

Finally, the environmental impact of telematics is also considerable with business fleets seeing a reduction of fuel consumption and carbon footprint of up to 30% when using telematics to analyse driving behaviour. This in turn has created savings of up to 15% on fuel.

Why are telematics not more widely used?

It is surprising that more insurance companies and drivers are not using telematics. Research from the British Insurances Brokers’ Association suggests that only 2% of the market share belongs to telematics insurance policies, as few insurance policies in the UK are telematics-focused.

Anne Sheehan

Reasons for not using telematics often stems from the ‘big brother’ perception of automotive technology, and what exactly happens to drivers’ data. With current issues around data privacy and security, sceptics use this as a reason not to buy into telematics. However, when companies are transparent about their use of data, this negative perception can be overcome.

It is vital that the automotive industry is more transparent and educates consumers on what exactly is happening to their data. The data from telematics could help traffic monitoring and routing opportunities, which again feeds into the safety and ecological benefits of automotive telematics.

The future of telematics

IoT could contribute to smarter, more efficient cities in future, with the development of connected transport, a really exciting prospect.

However, for telematics to take hold of the automotive world, governments need to provide further incentives. Providing Insurance Premium Tax (IPT) relief to those who take out telematics insurance, for example, could save drivers £180 (€198.7) a year on average, and young drivers up to £470 (€518.9).

To become world leaders in the development of the Fourth Industrial Revolution technology, then practical steps must be taken to further the use of telematics-based insurance policies. The benefits for consumers, and the impact on road safety and the environment cannot be ignored: we need to drive towards a smart, safer, and cheaper future for motorists.

The author of this blog is Anne Sheehan, enterprise director, Vodafone

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