For Automakers, Black Boxes Could Unleash a Torrent of Big Data
Okay, let's face it: car insurance isn't a thought that gets anyone particularly excited, despite what some commercials may claim. But a growing trend that started in Italy might mean big changes for automotive insurance that could actually put a smile on drivers' faces when it comes time to pay the bills. Now, insurance premiums with some providers will be based on driver safety behavior that's gathered through a little black box instead of police reports.
In certain cars throughout the United Kingdom and Italy, cars are now able to collect data that can help determine how safe your driving is even if you are never in an accident. This means that insurance companies can see their drivers as being an even safer bet, and in some cases have even offered insurance at no cost if your driving passes muster.
But with the promise of free insurance from safe drivers comes a big problem in the form of big data, which telematics company Wunelli outlined as challenges in the transmission, storage, access and usage to the information that these specially outfitted cars will soon collect.
While there are questions as to whether some countries like the U.K. will require all new cars to be outfitted with telematics equipment, Wunelli chairman Sandy Dunn foresees trouble for automotive manufacturers regardless, thanks to growing interest in “usage-based insurance” options, and the ever-expanding Internet of Things.
“We believe eCall is the first phase in a three-step process that will see the vast majority of new cars collecting driver behavior information by 2019,” said Dunn. “This is irrespective of speculation that the U.K. Government may press ahead with the compulsory introduction of telematics in all new vehicles following Italy's lead.”
Assuming automakers heed Dunn's warning, it's still unclear exactly whose domain this falls under. Although manufacturers will make the move to install these black boxes, they ultimately are not the ones interested in driver safety data on such a granular level, as the insurance companies would be.
“There are some big questions that auto-manufacturers need to be asking themselves right now so that they can start gearing up for a future in which they may be custodians of driving behavior data,” continued Dunn. “Looking to the insurance sector and aligning themselves in terms of strategy and technology is a logical approach.”
But insurance wasn't the only area of intersection that automakers may have to account for, according to the Wunelli chairman, who added: “It also makes sense to consider the benefits of working with roadside assistance companies given their strong tie-in at sales with three-year extended warranties for new vehicles.”
But when you take into account the volume of data that could accumulate as the result of widespread adoption, the problems with organizing these data to share them in a useful way become readily apparent. Each car would be tracking readings from the speedometer, suspension and braking systems and more to ultimately come to conclusions about whether a driver tends toward high speeds, fast cornering, and even rush-hour driving. But with all of this information will come a need for significant investments in storage and transmission, which for Dunn means that there's all the more reason to get the ball rolling.
“The potential for the information is enormous,” said Dunn. “Frankly, there’s no time to be lost. By 2015 it’s predicted that 2.15 million drivers in the UK will be using telematics-based insurance policies. Auto-manufacturers need to start getting in on the act and get ready for a future where every single day they will receive thousands upon thousands of pieces of driving behavior information that they will need to be able to collect, analyze and validate.”
Dunn explained that aside from Citroen, who partnered with Teletrac to become the first car manufacturer to offer telematics in the U.K., part of what makes this issue so pressing is that it's completely new to most automakers. “The winners will be those that start preparing now, taking from the experiences of the insurance sector and working independent telematics experts to develop their strategy so that when the time comes, the data deluge can create huge commercial advantage,” he said.