The idea of mobile applications recording driving behaviour seems to be catching on. Insurers provide a mobile driving app to download that will rate their driving performance and hopefully reduce their motor insurance premiums.
This new technology brings the convenience factor to telematic insurance, which is a growing concept in the industry around premiums being tailored to the individual rather than a set of demographic statistics. Around 180,000 drivers in the UK are currently using a GPS-enabled black box in their cars to monitor driving performance. However, with an installation cost that can go into the hundreds of pounds, there’s an argument to be made that black boxes have been aimed firmly at young drivers who can still save hundreds or even thousands of pounds on their premiums after paying the installation fee.
The UK’s largest insurer Aviva recently launched RateMyDrive, and app offering customers the option to have driving behaviour monitored and earn up to 20% discount on their car insurance with the company.
With the average 45 year-old driver paying in the region of £670 per year for car insurance and rising petrol prices making the filling up of the tank a major grab on the wallet, Aviva is obviously hoping that its customers will view this initiative as a way to cut their motoring costs.
The app basically rates how safely a motorist is driving by monitoring aspects such as cornering, braking, speed and acceleration. For those younger drivers addicted to social networking sites, there is a facility to share their progress on Facebook and Twitter and collect ‘badges’ – a potentially neat idea to market Aviva to others through that all important word of mouth factor. However, the important point is that Aviva will provide a score after 200 miles of driving, give feedback and tell its potential customer how much of a discount they can expect to get if they buy their car insurance policy with Aviva.
Aviva’s app initiative feels as if it is targeting motorists of all ages and gender, although it is not suitable for very safe drivers who pay an annual premium of £200 or under. For those on busy commutes and who have a more expensive model of car, the savings could certainly be worthwhile. The app works on a one-off basis, meaning that the score is only registered once with Aviva to get the discount, but it can be used to review driving behaviour as often as the customer wants.
At the present time, Aviva is not offering the rating service to existing customers so its strategy is obviously focused on winning new business. However, the company has said that it intends to offer the discount in the future to existing customers with the appropriate score.
Aviva is not the only UK insurance company that currently offers a mobile app linked to insurance discounts, although it is certainly the one with the highest profile. Northern Ireland based Autoline has an app called Road Safe Reward and it boasts that using it can save up to 50% off premiums. The difference with Autoline is that its scheme monitors driving behaviour on a quarterly basis. Unlike Aviva, Autoline will increase the premium if the driving score is very low but will reward safe drivers with an additional discount of between 5 and 10% each quarter.
Price comparison website Confused.com has launched MotorMate, an app for the iPhone and Android platforms, that measures driving style and performance and provides the driver with a score after 250 miles. While it is currently not linked to cuts in premiums themselves, Confused.com is offering £25 cashback to all customers who use the app and subsequently use its website to buy their motor insurance policies. If demand is high enough, it would seem reasonable that Confused.com will try to extend the use of the app with the insurers who feature on its website.
In all of the discussion about insurance premiums, it is sometimes forgotten that telematics is also designed to improve safety on the roads and decrease accidents. The jury on that particular issue, however, is still out. The Royal Society for the Prevention of Accidents has thrown its weight behind driver monitoring technology by developing the MotorMate application with Confused.com. The Association for British Drivers, however, suggests that really bad drivers simply won’t use the technology and that motorists would be better taking an advanced course if they want to improve their driving skills. Only time and increased use of telematics will reveal if it has the capacity to make Britain’s roads safer.
What is clear is that the insurance industry is expecting the popularity of telematic insurance to increase on an impressive scale. Its prediction is that 500,000 drivers in the UK will have this type of policy by the middle of 2014, in an attempt to counteract soaring premiums for young drivers and the likely increase in policy costs for women following the European ruling on disallowing gender as a factor in assessing premiums. Companies like Swinton, the AA and the Co-op have jumped on the bandwagon and are offering various types of black box technology to their customers.
It is not difficult to envisage an insurance industry where telematic policies become the norm, thanks to the advancement of technology. As the UK is at the forefront of this type of policy and smart phone adoption is at 39% of the population and rising, expect to see further development and use of mobile apps to provide tailored quotes for drivers.