Insurance companies face a tough balancing act. While low premiums are vital to outshine rivals, they must charge enough to offset risk – and the price of over-estimation is steep.
Over the last three years, 38% of UK consumers have cancelled policies because they were too expensive.
Although legislation is addressing some issues that can send costs spiralling — including tighter rules for whiplash claims — insurance providers need a better way of calculating the right price. Especially considering over half (56%) of recent cancellations occurred within the past 12 months.
Deep understanding of the way consumers drive must become the key factor of automotive insurance. In other words, premiums must get personal by utilising precise datasets.
Harnessing data-fuelled accuracy
Risk calculation has always used a certain level of consumer-level data. In the past, broad location information — where policyholders park their car, historic traffic analysis, and the average speed for local roads — has helped build relatively tailored profiles. But such pseudo-personalisation is no longer enough. Consumers want premiums that charge them according to their specific risk, not the average driver in their postcode or street.
As a result, focus on customisation is growing. Most insurers will be aware of the rise in usage-centric policies and black box tech: major players such as Allianz and AXA have used in-car connected devices to assess risk and give careful drivers cheaper premiums for years. But now, new opportunities are emerging to expand the horizons of black-box capability. With advanced tools such as GeoSpock’s state-of-the-art spatial big data platform, the sector is gearing up for a new era of insight-driven accuracy.
The road to greater precision
In the not-too-distant future, increasing adoption of autonomous vehicles will super-charge the data available to insurance firms; with multiple sensors collecting up to 30 terabytes of information daily. When evaluated and visualised via sophisticated analytics platforms, this spatial and temporal data will give insurers the detailed insight needed to track every driver movement, enabling them to create granular profiles and personalised premiums.
For now, the core innovation focus is on geo-fencing. Specifically: a combination of black box and geo-fencing technologies that can track how individuals drive, as well as whether their car is autonomous or not. By leveraging GPS signals, intelligent tools can consistently trace activity, such as the time, location and duration of journeys, or how often drivers take breaks. Meanwhile, accelerometer systems can evaluate technique: cornering, braking, acceleration, and speed. Armed with this steady supply of real-time data, insurers will be able to power decisions using current insight, instead of static information – be that verifying claims, issuing new quotes or instantly adapting the cost of policies.
Of course, there will be challenges to overcome. Before companies can obtain an intricate view of the modern driver, they must first gain permission to access data. But given the clear monetary advantages, it won’t take long for drivers to open up their information and start reaping the benefits of more personally priced telematic insurance.
To learn more about how the GeoSpock spatial big data platform can unlock insights in your data or to see a product demo, get in touch and a member of our team will contact you.