Since taking on ThingCo (www.thingco.com) as a client, I have been rethinking my views on the future of telematics. In 2016 I attended my first Insuretech conference to listen to speakers from outside of my experience. At that point I had been exposed to Ingenie and InsureTheBox, both of which seemed to have a good story for insuring young drivers. However the conference in London had in attendance the head of Daimler Insurance, who said something along the lines of “you insurers do not own the customer, we do, and we know far more than you will ever know about our customers” – in essence insurers would only get a small bite of the cherry through insuring the OEMs. He also pointed out that his car (a Merc, of course) was already largely autonomous and could drive itself from his house to work. This was the future and understandably I was convinced that he was right and that OEMs would control the automotive insurance market within a short period, but of course predicated on the autonomous car rise. Rolling forward five years and we are clearly not that close to autonomous vehicles running our transportation. Pity!

But two technologies have now impacted our consumer world forever. Voice communication (Alexa, Siri and Google) and the impact of smart phones with their ubiquitous technologies such as GPS, accelerometers and a multitude of apps, providing all sorts of information to the user. It is the voice element though that fascinates me. And this is the key, I believe, to the future of automotive instruction, regardless of whether cars are autonomous or not.

On to the motor industry though; it has certainly attracted plenty of attention with the concept of connected cars, 5G (imagine the conspiracy theorists views on the fact that cars will use 5G – the same 5G that caused Coronavirus), and plenty of other toys. There was an article this week on LinkedIn announcing the UK launch of Volvo’s “Care by Volvo”, a subscription service offering a new Volvo, servicing, wear and tear replacement, in car WiFi, and of course… insurance as an optional extra, Volvo of course stating that its safety features means that insurance should cost less. Of course there is that infernal “third party” in the equation!

Nigel Walsh, in sharing this article, elicited quite a bit of opinion. From Matteo Carbone who is skeptical about any impact at all to Peter Schwartz noting that cars represent one of the top five annual costs that consumers undertake; meaning that it will at the very least create interest. It will be interesting on whether the car rental companies will see this as a threat, although at this point minimum use is three months. 

But what is of most interest to me is that insurance is “an optional extra” – given that it is compulsory in most countries, why would the OEM miss this trick, especially given what the Daimler executive above stated in 2016? Another view – Elon Musk said  in a Q4’19 Tesla earnings call:

 “A lot of that insurance cost is just because the insurance companies don’t have good information about the drivers and that there is no good way to provide feedback where it’s a very poor feedback mechanism in terms of the insurance rates versus the actual way that the car is being driven, whereas we can do that in real time.”

Perhaps the answer does lie in ThingCo’s view on the world (it manufactures telematics devices which are designed around insurance).  Mike Brockman (who founded InsureTheBox) is convinced that voice will be the driver of future communication in the car, hence Theo’s (the device name) voice capability which platform is based on Alexa, for higher end models. The platform helps the driver to note risks and perhaps avoid them. The device is independent of the car OEM – it is also (importantly) not plugged into the car’s system at all and also potentially independent of the insurer – it merely offers the opportunity to offer to insurers information relating to driver behaviour in a manner that will allow discounts to be offered by insurers. This brings together a number of important trends; voice activation, consumer data belonging to the consumer, data good enough that insurers can use it (Mike is an actuary with a lifetime of experience in motor insurance) and in due course (given the sim in the device) the ability to communicate with apps that enable use of the internet while on the move.

To sum up, one of the comments that I saw noted that a tipping point is needed for car insurance to be totally disrupted and certainly it feels to me that the time is here. Perhaps the OEMs have lost the chance (for now) to dominate motor vehicle insurance – at least until cars are totally autonomous. I have stopped holding my breath on that, sadly!