As LexisNexis Risk Solutions continues to help insurers and auto manufacturers (OEMs) quickly scale their ability to collect, normalize and analyze telematics data, our experts have gleaned recurring cross-industry themes that signal upcoming changes in the way we as an industry approach insurance.
Earlier this year, Paul Stacy, Telematics R&D Director, LexisNexis Risk Solutions, sat down for a roundtable discussion with Ash Hassib, Senior Vice President and General Manager, Auto & Home Insurance, and Pavan Mathew, Director, Auto OEM Business Development. They exchanged views on the future of the insurance and automotive manufacturers/OEMs industries as topics such as telematics and the impending impact of the automated car shape new consumer trends.
The role of telematics has been expanding within insurance over the past several years, but it still seems to be a slow process. What are your predictions on consumer trends in telematics for the next year?
Paul Stacy: There are clear trends from our annual consumer telematics survey showing that in the past, consumers saw telematics devices as a bit of a threat – “big brother” watching over them. The industry has done a good job increasing awareness of the benefits of these devices, for example promoting the safety aspect of having a big brother to alleviate consumer concerns. The next step is for insurers to focus on how to increase market penetration, which can be done with lower-cost data and connected car data through exchanges.
Ash Hassib: The insurance industry has finally moved to understand that consumers aren’t willing to pay for subscription-based telematics services. Both carriers and OEMs know that there is a lot of rich data collected, but they aren’t quite sure what to do with it. What OEMs and insurers need to understand is that they can monetize all of this data by looking through it, getting smarter about it and producing a faster cycle of development. They can look to partners (like LexisNexis Risk Solutions) to help them analyze the data.
It seems like the whole world is buzzing about the autonomous car. What can we expect to happen in the transition from where the insurance industry and OEMs are today to the connected car, and then ultimately to the fully autonomous car park?
Paul: There will be a transition from dongles to apps and insurance companies will have to realize that they aren’t always going to get everything they want out of an app – technology will always change. And some carriers haven’t adopted technology like apps as quickly as predicted. With a combination of potential limitations and people waiting for connected cars, we might continue to see a stall in penetration. But waiting could be bad for business. Carriers need to get their hands into this data and start learning how to manipulate it to update their models efficiently.
Ash: Further to Paul’s point, while you may think of apps primarily on the insurance side, we also see apps on the OEM-side. It’s also incredibly important that OEMs understand the data coming out. It’s notable that the OEM industry hasn’t had to deal with consumers in the past because it falls to dealers and other partners, but we’re going to see that they will have to increase their customer touch points.
Pavan Mathew: Right now, only a small percentage of consumers are actively looking for cars with OEM telematics. Connected platforms are common, like those used in airbags. There isn’t a widely accepted position that the connected platform itself is a differentiator and that consumers are buying vehicles based on this. But as we raise awareness, and with vehicles becoming “uber-connected,” like interacting with Amazon’s Alexa platform, consumers will start connecting the benefits of owning a car with telematics capabilities even more.
How are connected cars contributing to insurance telematics?
Paul: The last few years, telematics have been predominately focused around dongle, black boxes etc. But in the next couple of years, we will be talking more about OEM pilots and OEM data.
Ash: I predict that massive adoption of autonomous vehicles is about 10-15 years away. And over the last eight months, there has been a significant increase in the amount of discussions about fully autonomous vehicles. This affects how business models will look in future. Right now, insurance companies see connected cars as a good thing and see autonomous cars as a threat (liability change from personal to product liability). At CES in January, automakers talked about autonomous driving and the key message was safety. So in the future, automakers could demonstrate their commitment to safety by taking on part of the liability coverage of their driverless cars.
How does LexisNexis Risk Solutions fit into the telematics space?
Ash: With LexisNexis, insurers get to protect their investment because we have a platform that is device-agnostic and vehicle-agnostic, and we can normalize data regardless of source. Insurance companies can protect their investment if one of these technologies becomes outdated in a few years.
Pavan: We have the unique ability to deliver telematics information at scale. In fact, we just announced our U.S. engagement of three auto manufacturers to provide an even bigger data set that integrates seamlessly into usage-based insurance (UBI) programs. As a trusted steward of data in the insurance industry for more than 25 years, we’re proud to say that LexisNexis is bridging a gap between two industries—the automotive and the insurance industry.
LexisNexis Risk Solutions has investigated consumer attitudes towards telematics and usage-based insurance since 2010. Download the 2016 Whitepaper to learn how carriers can best drive adoption and unlock untapped opportunities to expand into markets while accessing deeper and broader data sets.
In a later blog, we’ll dive deeper into the future of telematics and the connected car and telematics impacts on safe driving. Subscribe here so you don’t miss an insight!