Insurance Telematics in India
Insurance Regulatory and Development Authority of India (IRDAI), the insurance regulator in India had put up ‘Discussion paper on Telema cs and Motor insurance’ on 4th of August 2017. The regulator has asked the insurers to send their views on implemen ng technology and revisi ng the pricing methodology. The insurers have also been told to look at alterna ves to conven onal telema cs devices like smartphones with mobile apps, dongles, black boxes, bluetooth etc.
Highlights of the discussion paper At present, Motor Insurance in India is being priced based on parameters like the Make and Model of the Vehicle, its capacity, the geographical use etc. The customers who use their vehicles for lesser dura on or lesser distances are prone to lesser risks and those who use their vehicles for longer dura ons and more distances are prone to more risks but both sets of customers today pay the same premium for a par cular vehicle. Insurance premiums are being charged based on available informa on related to limited parameters only. If accurate informa on and more relevant data are available, premium can be worked out more scien fically, commensurate with PG.16 | Smart Automo ve | Sep - Oct 2017
the risks involved.
Telematics as a solution ‘Telema cs’ can offer a solu on to the above aspects. It can enable insurance companies to use technology not only to assess risks be er and also offer more efficient claims services. There are technologies, enabled through internet connec vity, that offer solu ons ranging from embedded vehicle telema cs systems to smart phone applica ons that can assist tradi onal business models and create new opportuni es, which may ini ate rethinking on how insurance companies can carry on business. It has been seen that new technologies can enable insurers to offer new and valueadded services. Usage of Telema cs in insurance is known as ‘Telema cs Insurance’. Telema cs Insurance is known by several other names—Black Box Insurance, GPS Car Insurance, Smart Box Insurance, Payas-you-Drive-Insurance, Usage Based Insurance (UBI) and so on. As can be seen, generally when it comes to insurance, Telema cs has applica on in the Motor segment. Telema cs Insurance works by fi ng a
vehicle with a small device—commonly known as a ‘black box’ that records speed pa erns and distance travelled as well as data about the type of road/s the driver is driving on and when (whether night or day or during the weekend etc.) and how long he has been driving. The technology can also monitor braking and cornering to build up a picture of the driver’s driving style. Generally, Telema cs devices operate with accurate and reliable GPS technology and can capture data like– maximum/average speed travelled, accelera on, braking, cornering, la tude/longitude, eleva on, distance travelled, number of journeys, journey me, road type, G-force (impact detec on), idle me, number of other cars on the road, weather circumstances etc. Data can also be collected through use of smart phone and on-board diagnos c port. In UK and USA, implementa on of Telema cs commercially began back in the early 2000s. However, the introduc on of smart phone technology combined with an easier and cheaper installa on process has enabled as re-launch of Telema cs Insurance in 2010 keeping in mind a par cular target segment—the young drivers. At present, even in these countries, Telema cs Insurance is a niche
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