“Telematics poised to revolutionise the mass motor market” – Carrot director

Telematics will revolutionise the mass market for motor insurance because it enables insurers to see what is actually happening to the driver during the period of insurance, according to a senior director for Carrot (insurance for young drivers)

Speaking at the TU-Automotive Connected Car Insurance Conference on 13 April, Ed Rochfort contrasted traditional motor insurance, “where underwriters close their eyes and cross their fingers once they have incepted the policy, with telematics, where you look through a different lens at a portfolio of motor insurance risks, and once done, you’ll never want to go back, as factors come into focus which previously looked pretty vanilla.”

He explained that, thanks to telematics, a large number of new factors, such as smoothness of driving, speed limit infringements, road type usage, time of day, mileage and road familiarity, enables insurers to see behaviours which very strongly correlate to risk.

“Assuming you’ve structured your proposition appropriately you can actually start to act on them during the course of the policy and interfere with the natural level of risk presented by the customer in order to protect underwriting profit.”

Rochfort said that Carrot’s risk management team had reduced accident frequency by 42% among its young drivers in the last 18 months, through a strategy of positive intervention when the data showed a customer had driven beyond acceptable limits.  “Our team made 27,202 interventions and 2154 individual customers were issued a formal excessive speed warning. Of those, 1393 (65%) positively changed their driving behaviour and received no further warnings.” 

He said the company was now bringing its experience with young drivers to the mass market with Better Driver insurance, an app-based telematics product that is designed to appeal to any driver with two or more years’ driving experience.

He conceded that young drivers tend to be more receptive to feedback than adults, and adult drivers are less willing or able to change their driving style, “but there is still a huge opportunity to benefit from selection.”

“As telematics captures more of the mass market we will become increasingly agnostic to the source of the data we use to analyse driving behaviour. Tens of thousands of connected cars are now rolling off the production lines daily and Carrot (via parent company Trackglobal) is talking to a number of vehicle manufacturers and operating system providers to start to use the data collected by devices already embedded in the vehicle.”

Looking ahead, Rochfort predicted that motor markets that embrace mass market telematics will be just as competitive. “They will evolve similar online and aggregated models of price comparison, creating the same intense levels of competition and a more price sensitive consumer that exists today.

He said: “This is a perfect melting pot for our kind of telematics products to evolve from, so from a UK perspective, the products and propositions we are all involved in building telematics for today’s mass market – such as Better Driver - will become the way things are done around the world tomorrow.”