Smart cars will have a big impact on insurance industry

Ashley Thomas

For example, the driver will be able to receive real-time monitoring of the vehicle's status and operation as well as early detection of problems. For tracking companies, there will be real time vehicle tracking in the event of theft or hijacking. Drivers will have access to maps, real-time traffic information and satellite imaging and route optimisation, as well as immediate information about fuel prices and the location of the nearest fuel stations.

It's estimated that by 2020 there will be a quarter of a billion connected vehicles on the road. Connected or smart cars are set to have a big impact on the insurance landscape. "Ultimately, it's set to benefit insurers, brokers and consumers," explains Ashley Thomas, assistant executive for insurance software solutions at Innovation Group.

Greater accuracy

"This technology will allow for greater accuracy of claim assessments and risk management, which will impact underwriting and rating structures. The use of the information relayed from the vehicle could also result in premium decreases for the consumer," says Thomas. He adds that these smart vehicles will also allow insurers and brokers to access relevant data on the regular driver, such as license status, traffic infringements and medical information.

These connected cars could help to improve the overall driving experience as well. "Having on hand real-time information such as engine running condition, exact tyre pressure or proximity to other vehicles as well as information relating to traffic and road conditions will certainly impact how we use our roads and ultimately contribute positively to road safety."

"Having real-time information on hand is a huge benefit, especially in the instance where an insurance claim needs to be lodged. The entire process from first notice of loss, towing, procurement and repairs could literally be managed through data feedback, which is a concept that speaks directly to the Internet of Things (IoT)," says Thomas. "Interestingly, the IoT will eventually impact preventative measures through data analytics as well."

Personal information

Although connected cars will be adding so much more value to our driving experiences, many people still have concerns over the security of their personal information. The main problem is that these connected vehicles are currently not being designed and built with defence mechanisms in mind. Exposing anything designed to work in one environment to the much more hostile environment of the internet makes it an easy target for those inclined to abuse this kind of information.

This raises the question of how insurance processes will be amended to cater for connected cars and security of information. Thomas explains that security practices are going to be driven by the Protection of Personal Information (POPI) Act and that consumers, as always, need to be vigilant when it comes to connected cars. They need to take all necessary precautions to ensure that their private information is protected.

The connected car has a wide variety of applications that can be hugely beneficial or detrimental to the end consumer. "Data will be used to either manage or reward consumers based on their behaviour. It will ultimately be the responsibility of the consumer to remain on the 'right side of the fence' and to reap the rewards associated with compliant behaviour," concludes Thomas.