Automotive > Infotainment & Telematics Blog

Will UK Turn to Telematics to Fix Auto Insurance Woes?

by Roger Lanctot | 2月 16, 2012


Plagued by uninsured drivers and fraudulent whiplash claims representing as much as £2B, the government of the United Kingdom is considering implementing policies favoring the use of aftermarket telematics devices. An agreement and recommendations were hammered out in a meeting earlier this week at 10 Downing Street between Prime Minister David Cameron and eight representatives of the insurance industry.


At issue is the rising frequency of whiplash claims – now 1,500/day – adding £90 to the average auto insurance premium. Among the findings agreed to by the gathered executives was “a deeper exploration of the power of telematics to control claims costs.”

Telematics technology, in the form of aftermarket usage-based insurance offers, has already been deployed to help lower the cost of insurance in the U.K. thereby reducing somewhat the substantial numbers of uninsured drivers in the country.  By some estimates, the U.K. has the most severe uninsured driver problem in the world.

White box UBI solution provider Wunelli estimates that at least 10 insurance carriers are currently offering UBI products in the U.K.  These organizations are adding a total of more than 7,500 drivers/month, by some estimates, to the ranks of U.K. UBI users.  Wunelli executives believe that within two years nearly all younger new drivers - who now pay exhorbitant rates - will be UBI customers.

Wunelli insurance partners include Sabre, The Co-operative Insurance, Admiral, The AA, Swinton, Coverbox, Allianz, Equity Redstar, and Markerstudy Group.  Other U.K. UBI providers include Insurethebox, I-kube, Auto Saint and InCarGenie. 

The programs involve the use of an on-board device for tracking time of day, speed, braking and cornering behavior with a Website-based scorecard for providing user feedback.  The programs vary, with discounts offered based on driving profile and with some programs allowing the insurer to terminate the insured with an agreed upon notice period, also based on driving bahavior.

Since the devices currently on the market include accelerometers they can also be used forensically to assess the causes of accidents.  Wunelli offers a module with enhanced event data recording (EDR) for this purpose although the U.K. government does not yet accept data from non-Home Office-approved devices as evidence.  (The data from these devices can be entered into testimony but cannot be the sole evidence supporting or countering a claim.)

But what is emerging is an evolution of the automotive aftermarket module market.  What began as a device targeted at theft deterrence and the fleet market has evolved into UBI applications and, now, is taking on EDR functionality.  A single aftermarket device can now be used by an insurer to prevent theft or recover a stolen car, provide discounts based on driving behavior, and diagnose the causes of accidents, reducing the rate of fraud claims.

The insurance industry is providing the most immediate and tangible monetization opportunity for telematics technology, paving the way for embedded, line-fit solutions.  Young Marmalade in the U.K. is a precursor of this embedded approach, selling cars which have already been fitted with UBI modules to young people.

Rather than focusing on enabling Twitter and Facebook applications in the car, OEMs should be looking to the insurance market for real solutions for which customers are willing to pay today.  Drivers are demonstrating a significant willingness to opt into sharing their personal information in exchange for lower insurance rates and protection against fraud or theft.


Eventually, aftermarket and embedded vehicle connectivity technology will speed the claims process and shorten the time required for accident investigations.  In the future, fraud will be almost impossible to perpetuate without hacking into on-board modules to corrupt the data being transmitted.

Vehicle connectivity will also change the customer relationship with insurance companies with two effects:

#1 – Insurers will continue to add functionality to their devices, including smartphone connectivity, to achieve closer relationships with insured drivers.  Additional application opportunities lie in travel services such as navigation, traffic information, gas pricing, and parking information; as well as distracted driving mitigation functionality, automatic crash notification and customer relationship management such as affinity marketing.

#2 – Car makers will accelerate their embedded telematics plans.  The shift to more widespread embedded connectivity will allow car makers to either co-opt or pre-empt the insurance relationships or will enable a co-operative engagement between insurance companies and OEMs.

The fact that the U.K. government is lending its endorsement to telematics technology is only the latest validation of the approach.  One of the solutions to the whiplash-fraud problem is to disallow claims for impacts that have occurred at 30 kilometers per hour or less – a proposition that will benefit from the use of an aftermarket device to validate the speed at the point of crash.

Example of Co-operative/Wunelli UBI dashboard:

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