Insurance companies are to demand an increasing amount of personal data via telematics - both in-car and in-home - in order to fine-tune insurance rates for consumers, according to AXA's group CIO and COO, Kevin Murray.
Murray believes that telematics will become a mainstay in the UK within five years after making inroads in the US, despite initially being regarded as a "Big Brother"-style tool.
"People are currently saying that it's kind of like Big Brother, and that they don't want third parties to necessarily know where they are and how they're driving," he said in an interview with Computing.
But telematics won over parents in the US, as they could install the technology in their cars to ensure their children were driving safely, and it has become more widely used in the UK in recent years.
"The parents thought, 'I'm paying for this and I want to know where my kids are'. There were added benefits, too, such as in the case of an accident the system would immediately alert emergency services and, if your kid drove well, then you would receive a 15 to 20 per cent discount," said Murray.
This was as long as children abided by certain conditions set by the insurers, such as not driving after midnight and not driving with more than two people in the car, for example - all information that needs to be recorded and sent back to the insurance company via the telematics device.
To help alleviate the Big Brother fears, US insurers Geico and Progressive told consumers that they could even switch-off the telematics boxes for a particular day if, for whatever reason, the driver didn't want to be tracked by a third party - as long as the driver meets certain data thresholds every week or month that satisfies the insurers' underwriting criteria.
"What they found was that now that they've given the ability for people to turn it off, very few people do [turn it off]," said Murray.
And as telematics evolves - with manufacturers such as BMW and Mercedes installing them as standard into cars themselves, in an attempt to lure drivers back to dealers' garages for maintenance - Murray believes that consumers will become more willing to give up their data in return for a personalised insurance quote.
In the process, the insurer will also know when the car is being driven, where it is parked, how often it is driven and how well maintained it is.
Murray suggested that someone who purchases a car could tell the manufacturer that they don't mind their data being handed to insurance companies, but not to any other third parties. Alternatively, they could decline the use of their data altogether. Either way, both the manufacturer and insurer would need consent in one form or another.
Murray's belief that insurance rates should shift from being a "big underwriting pool of risk" to more targeted and strategically set prices does not stop at car insurance either.
He believes that similar new technology will help insurers to tailor pricing in other areas of insurance, such as home insurance, while data gleaned from wearables could help set the price of health insurance.
AXA is looking into how connected devices in the home can also send data back to the insurance company, which could enable it to find out more about the consumer.
"[Google-owned] Nest is a good example, because not only is it going to monitor the home for temperature but it may know when you're home as well as other details," he said.
Other ideas that Murray said AXA is looking into is the use of heat sensors and graphical imagery from satellites to determine the condition of a roof and how much energy leakage there is.
Keep an eye out for the full interview with Murray, which will be published on Computing.co.uk shortly.
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