Is telematics the cure for the ills of the motor market? Or is the rise in the use of black box technology a false dawn? Greg Bannister explains.
Much has been written on the subject of telematics, its potential to help fight against fraud and the whiplash epidemic. But is it the panacea that the industry has been looking for? Or will the practicalities render it a white elephant - at least as far as claims are concerned?
While the industry's PR machine has touted lower premiums as its mean benefit, its use in the claims arena is perhaps more important to insurers. Given the fact the devices can detail the time, date, location, distance travelled, speed, acceleration/deceleration and time spent idle of a vehicle in any journey, it is easy to appreciate the value of the information in considering claims where causation or fraud is suspected or liability disputed.
But before the industry gets too excited, there are a number of logistical issues to address. How easy will it be for lawyers to apply for black box evidence from a defendant's insurer? What data protection issues are there to overcome? How likely is it that an insurer would disclose data to a third party unless it assists their own defence?
There appears to be a reticence by insurers to disclose the information gathered and of course, the barriers are clear.
Nobody likes unilateral disclosure and the issue here is only one side will have the data to prove or disprove a claim. The temptation to only disclose when favourable is understandable, but a court's likely view of this action needs careful consideration.
Data protection is rightfully of utmost concern for telematics insurance providers however, with the Insurance Fraud Bureau estimating motor insurance fraud costs running at £4m per week all available weapons to defeat the fraudsters must be considered.
Telematics-based motor insurance products are sold on the basis that utmost care will be taken with the data collated, including that the information will not be passed on to the prosecuting authorities when an offence is detected, such as a breach of the speed limit.
The holders of the data have a duty under the Data Protection Act to use the information ‘fairly and lawfully' and so in reality, whilst a proactive report to the police will clearly not be made, where the police are investigating a crime then there will be a duty to disclose the information. Similarly, where insurance fraud is reasonably suspected, a defendant will be able to apply for release of the relevant data under the Act.
So how can the industry overcome the barriers to ensure that its customers are treated fairly an the industry itself can harness the power of the data to combat fraud?
The ideal scenario is that drivers are told that telematics data will be disclosed. There are clear benefits to this approach, it provides certainty for the insurer as fault claims will be settled at the earliest opportunity, reducing its costs.
Equally important, disputes and suspected fraud cases will be vigorously fought with the benefit of this scientific data, increasing the prospects of success. And to ‘sell' it to the customer, perhaps greater transparency is required regarding the impact of fraud on motor premiums and how disclosure of telematics data can help fight the good fight?
If people can be persuaded of the merit in being careful, but not overly protective of their data as well as their driving, then it really could be a case of fraudsters beware.
Greg Bannister, technical assurance manager for motor, Questgates
Zurich disappointed in new #discountrate. David Nichols, Ch Claims Officer: "The failure to change the discount rate to a balanced level will only serve to increase the cost and, therefore, affordability of certain types of insurance - especially for higher risk customers." pic.twitter.com/ac1CfBzfxX— Zurich Insurance UK (@ZurichInsUK) July 15, 2019
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