Out-Law News | 27 Apr 2015 | 12:30 pm | 4 min. read
Thatcham Research has been working with and on behalf of insurers on the development of "technical guidelines" relating to telematics devices for three years and liaising with other stakeholders on the work over the past 18 months.
Andrew Miller, chief technical officer at Thatcham, told Out-Law.com that if the guidelines are adopted it would standardise the type of continuous information it would be appropriate for a telematics devices to record and transmit. This is the information used to build up a profile of drivers' behaviour, and includes data on their speed, braking and acceleration.
Miller said adoption of the guidelines would also standardise the type of the data recorded by "event data recorders" fitted in vehicles, such as airbag sensors. Those recorders help insurers understand what has happened in a crash situation.
He said the draft guidelines have been designed on an "open architecture" basis and could be applied to both telematics devices fitted inside vehicles as well as the telematics data recorders in smartphone applications.
The Association of British Insurers (ABI) confirmed to Out-Law.com that Thatcham's work on standardisation is being undertaken in conjunction with the Society of Motor Manufacturers (SMMT). The ABI described the work as being in its "research phase" and said it is currently focused on "establishing insurer requirements". It said "more formal engagement with vehicle manufacturers" will follow at a later point in the process.
However, Miller said he has seen "varying degrees of appetite" for standardisation in telematics across the telematics industry.
Miller said that some 'black box' manufacturers, including both insurers and stand-alone technology developers, are lukewarm to the idea of telematics device standards. He said those companies have commercial concerns about standardisation and possibly believe that the unique selling points of their devices might be lost if they have to conform to new standards.
Miller also said that Thatcham is aware of the potential impact that advancements in connected cars technology could have on its work on the technical guidelines. He pointed to "the latest architectural development" from electric car manufacturer Tesla as showing "how future connected vehicle functionality could be developed".
Tesla has developed a system of delivering so-called 'over-the-air' software upgrades which mean the latest software improvements to a particular model of its cars can be activated by drivers using the touch screen inside those vehicles. A Tesla spokesperson said "the experience is similar to downloading the latest software upgrade for a smartphone", according to a Computer World report.
Miller said Tesla's development will prompt other connected car manufacturers to develop similar technologies and said the advancements with technology could overtake its standardisation work.
"We don't want to put something out there that people in the industry don't want," Miller said. "We are working for the insurance industry and will have to consult with them on the final document first before wider distribution, so it is unlikely that the insurers would reject it as an industry. However, whether individual insurers would adopt it in their own businesses is a different matter entirely."
Insurance market expert Iain Sawers of Pinsent Masons, the law firm behind Out-Law.com, said that standardisation in telematics will be important to help insurers address the question of data portability. He said that forthcoming EU data protection laws require the industry to address the question sooner rather than later.
Under these proposed rules, owners of the rights to exploit data, such as motor manufacturers, telematics technology providers or insurers, will have to ensure not only that they have the correct authorities in place from the driver to use the data they produce, but also that they can hand over the data they possess on an individual in a usable transferable format. These rules are designed to allow customers to switch service providers with ease.
Michael Thomas, strategy and planning director at Ageas, recently said there is also a commercial incentive for insurers to help drivers access their telematics data more easily.
"If you can build a proposition where the customer sees a value in the data they have created with you through their driving behaviour, that will drive the customer’s decision-making," Thomas said, according to a report by TU-Automotive. "We have to have a conversation in the UK about how we can make driver behaviour more portable between insurers, rather than locking the customer into one insurance solution. The industry has to talk about data portability."
The ABI said that there are existing ways that drivers with telematics-based motor insurance cover can access their telematics data.
"Most ‘pay how you drive’ policies provide regular feedback to customers on their driving performance via an online web portal," the ABI said. "Customers also have a right to access any data that is personal to them (under the Data Protection Act), which may be more than is provided via the portal. Asking for this information is known as making a ‘subject access request’ and there is usually a small charge for this data."
"If they want to use their telematics data when shopping around for a new policy they can authorise their current insurer to release it to a potential new insurer," the ABI said.
However, Sawers said that data portability is more complex without standardisation. He said that standardising the way insurers rate drivers on the basis of black box data would be the best way to enable consumers to get prices for cover from different insurers based on their driving habits data.
Miller told Out-Law.com, however, that the industry has not yet established a consensus behind this point.