August 17, 2012

Earlier this week, Aviva began a pilot of the RateMyDrive app for Android phones, which drivers can use to have their first 200 miles monitored for information on acceleration, braking and cornering. Drivers whose risk profiles come out positive are eligible for a premium discount.

This news was somewhat unexpected, as Aviva, when it used the name Norwich Union, ended a usage-based insurance program in 2008 due to lack of interest. I reached out to Jonathan Burdett, a director for PwC in the UK who focuses on insurance, and asked him: What's changed about the UK insurance market that makes telematics appealing again?

The UK motor insurance market has made an underwriting loss every year since 1994 and is now facing a competition commission enquiry into the reasons behind rate rises in recent years as the industry has sought to deal with an increasingly hostile claims environment. So it is no surprise that insurers are looking at innovative ways to market their products and better assess risk.

Telematics has been around for some time but recent developments in mobile technology and data analytics make it a much cheaper and more attractive prospect. It is now possible to implement telematics without additional hardware in the vehicle through drivers' own mobile devices, and improvements in data analytics technology means insurers can make more sophisticated use of the data collected, for example by analysing driving styles, rather than crude mileage and speed statistics.

From an insurer's perspective, it feels like a no-brainer but the question is whether consumers will see it as an opportunity or a threat.

ABOUT THE AUTHOR
Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, ...