The global telematics space is heating up and SA is very much in the race

Following a series of high profile telematics conferences around the globe and research released by US firm LexisNexis; a clear picture is forming over the state of global Telematics. The US is making the bigger strides with Europe in tow, and South Africa may surprise a few.

In the US, 1.85 million people enrolled in a Usage Based Insurance (UBI) program in 2010, with this expected to reach nearly 90 million in 2017. This salient projection from ABI Research hints at the fact that the picture may be a rosy one. Projections like this are commonplace, however. It’s when you look into the details that you learn more.

LexisNexis looked at awareness and interest levels across the US market. Awareness of UBI programs rose by just one percent from 37% to 38% from 2013 to 2014. Interestingly, awareness of UBI programs among 21 to 25 year olds has increased markedly from 31% to 45%. This spread into a younger market makes sense as “digital natives” – the young ones who were born into technology – are far more receptive to new concepts and may yet prove to be the perfect conduit into mass uptake.

The big brother factor associated with telematics was always a barrier to smooth adoption, regardless of which market. Here the research reveals that consumers in the U.S. are actually now as comfortable sharing UBI driving data as they are sharing many other types of information. Those surveyed showed most reluctance in sharing personal information on social media (27%), followed closely by online search data (29%). Concerns over UBI driving data being collected was at 35% and the winner by a long way – UBI accident information at 48% – being the type of data drivers are most comfortable sharing.

Local Telematics providers are seeing initial concerns over privacy wane as tangible results are produced. From successful pilot projects by Discovery Insure, with undeniable evidence of improved driving and reduced premiums, to increased media exposure, telematics is taking a foothold in South Africa.

“The South African market tells a similar story to what we are seeing across the globe. There is a clear rise in awareness and uptake as early adopters see actual decreases in their premiums. In an economy where people are taking strain, this is an important decision driver,” says Sandra Page, Head of Insurance Business at Tracker.

The research also shows that offering popular value-added services in addition to discount incentives increases demand. Services such as emergency roadside assistance, automatic emergency crash response, stolen vehicle tracking & recovery helped boost interest from 54% without value-added services to 60% with the inclusion of the services.

Mobile, the new poster-child of Telematics is undeniably picking up traction abroad. The amount of respondents who were interested in a mobile only Telematics service, as opposed to both mobile and on board devices, has grown from 29% in 2013 to 34% in 2014.

According to US telematics software firm, Driveway, changing perceptions can be attributed to the evolution of smartphone UBI and the fact that several reputable companies – Deloitte, Agero, Cognizant – have improved smartphone UBI apps to enhance the consumer experience. Many second and third generation smartphone apps have already eliminated battery drain and the need for start/stop buttons. And the most evolved are able to merge data collected in the car with the power of cloud analytics for more accurate event interpretation.

Key players shared insights on the rise of user-based insurance at industry events over the past month. By all accounts, insurers across markets have moved past the question of whether usage based insurance is a good idea. They mostly agree that it is the way of the future – perhaps a whole new model for connected consumer engagement – crucial in a digital economy, according to Driveway.

“For the big growth markets of tomorrow, the benefits need to outweigh the risks. In order to achieve this insurers are looking to offer compelling driver portals, driver coaching and tips, gamification, performance benchmarking, weather and traffic alerts, and even roadside assistance capabilities – all while collecting reliable UBI data.” Says Page.

It may seem like after a few hill-start stalls and some grinding of the gears, user based insurance in South Africa is still trying to pass the K53. But research from abroad and industry insiders confirm that we are moving forward at a steady pace.

We’ll just need to keep checking our telematics app scores to see if we remain on track.