I have been chosen by my company to participate in a pilot
program. No, I won’t be flying air planes,
but even more exciting, we are breaking ground into the 21st
century of insurance! We are studying
the use and effectiveness of information obtained through telematics. As a fleet driver, my company wants to
install a little box in my car that will monitor my driving habits. Now, before you go all George Orwell and Big
Brother on me, let me explain why the risk manager in me is actually excited
about this.
What is Telematics?
Telematics is the collection of data about personal driving
habits that insurance companies can use to tailor rates and possibly discounts
to individuals, rather than an entire "pool" or community. The insured will install a small
device, nicknamed a dongle, into the built-in port under the dash. This dongle will measure many things, like
hard stops, hard accelerations, speed, time of day, and miles driven. It then reports that information back to the
vendor to cleanse and analyze characteristics of the data that they share with
the company and the driver.
Reality is this isn’t some distant future; this is happening
now. However, the industry has one
gigantic hurdle to overcome--Fear. Fear
of being watched or followed and even more importantly, the fear of personal
information falling into the wrong hands and being used for the wrong purpose. It doesn't help that new reports of data
breach of epic proportions are being discovered at an alarming rate.
Still, the real issue is ignorance. For years we have preached that insurance is
a relationship business and we have failed to forge true relationships of
trust. We have failed to educate our
insureds on basic issues of liability, much less advanced technologies like
telematics.
What are the benefits of telematics?
The information gained can be a win/win. By identifying safer drivers, the company can
use the information to help with auto insurance pricing and risk
segmentation. This can be a win for the
consumer who is interested in personalized pricing and possible discounts based
on their driving habits, not their neighbor's.
How do we educate the consumer?
We must remind them that it's not a camera, it's not a voice
recorder and it doesn't monitor the local businesses they frequent. It measures driving habits. That's it!
It collects speed, miles driven, hard starts and stops, and time of
day. We must explain that this information
is only seen by the company and themselves, and it's nothing of an identity
nature that can be stolen. The best way
to overcome fear is to explain, explain, and explain!
Finally, they must see us use the devices ourselves. I'm putting my money where my mouth is. That's why I'm excited. I can educate and gain trust by showing that
I'm not afraid to use the same device in my car that I'm asking them to use in
theirs.
