A recent survey run by Insurance Business
found that 42% of those surveyed believe that telematics will have a limited impact on the Australian insurance industry this year, with 22% believing the technology will have a big impact.
Paul Miller, SSP general manager Asia-Pacific, told Insurance Business
that telematics continues to gain a foothold in the Australian market and 2016 should see more growth.
“Momentum is picking up - we have three projects going live in the next month with insurers,” Miller said.
“And there are already solutions out there from QBE
. We think that there is a tremendous opportunity for insurers to gain more profitable business, and that eventually the technology will be seen as an essential offering to be a serious contender in car insurance.
“The smartphone approach offers the ability for insurers to form a more regular connection with their policyholders and offers a new approach to forge customer loyalty.”
Andrew Parker, head of Aspen Re Australia agreed, noting that telematics will have an impact in risk assessment.
“Telematics is definitely a growth area and offers insurers and clients the opportunity to improve risk management,” Parker told Insurance Business.
“The industry can play an important role in this growth through the use of advanced analytics and predictive models that accurately evaluate telematics data.
“This represents a big change as risk assessments can be based more closely on actual behaviour.”
Miller continued that telematics will not remain in the personal portfolio as the commercial space offers great opportunities to insurers.
“We think the technology is a natural to extend to commercial and fleet and could be extended to other forms of transportation,” Miller continued.
“We’re already talking to customers about home sensors for monitoring moisture, temperature and other factors that could impact claims experience over time.
“As sensors continue to become cheaper and more prevalent, we could see the technology extended to other physical assets – plant, agriculture.”
Miller stressed that telematics could prove to be problematic for brokers in some sense but the benefits may outweigh the rewards.
“It will give brokers new competitive offerings, but potentially make fleet insurance ‘stickier,’ ie depending on the technology used, it may be more difficult to swap insurers,” Miller said.
“Still if it gives the end customer a better product it should also be better for the brokers.”
Brokers may suffer due to a lack of resources in the telematics space but intermediaries must become familiar with the technology, Miller said.
“There are challenges to integrate the technology into the rigid and outdated legacy systems that many insurers use to process their business.
“Brokers too have integration and learning curve challenges, and in many cases have less resources to execute. They will have to become familiar with the offerings and understand the value they provide for their customers.
“Telematics is not all about pay as you go, but it is an aspect and will challenge broker billing systems,” Miller stressed.
, and their InsuranceBox technology “the leader in this space” in Australia, Miller said businesses still have a lot to learn from telematics but those who ignore the trend risk being left behind.
“The local industry is still building their knowledge base to better understand how they truly integrate the technology into their product,” Miller said.
“The companies that are already in telematics are building their knowledge base and IP to better exploit the technology.
“They are also building a tremendous library of data on driver behaviours. Insurers that are not doing this in 2016 will be at a disadvantage.”
The impact of telematics on the Australian industry will continue to grow in 2016 as “momentum is picking up” for the technology.