Telematics have been present and utilized for a millennia, starting with black boxes ever since the1970's, with a wide adoption and standardization in the late 90's. The earlier application was best used for accident investigations, practiced by law enforcement for evaluation purposes .
Telematics have come a long way since then, both in make and application. Be it with the newest models of autonomous vehicles, or the practice in industries such as insurance.
This begs the question, what are telematics ?
The word comes from the combo of “telecommunication” and “informatics", and refers to transmitting , storing and receiving of information from devices to remote objects over a network, by utilizing communications and IT.
Another inquiry would be, how are these technologies related to insurance?
The main applications of telematics in insurance would be in assessing driver risk, be it safe or unsafe driving pattern, so as to better understand the potential rate and frequency of the driver having accidents and filing claims.
Should one sign up, do all these "telematics" come in the same shape and form ?
As mentioned before, telematics have changed and retained theri build throughout the years, here are a few examples and their functionality.
Black Boxes
They contain trackers as well as event data recorder (EDR) that depicts data such as speed, throttle position, brake usage, seatbelt usage, airbag deployment, and other relevant information
OBD Devices
They are a bit newer, as they retain on board diagnostic(OBD) data, as well advanced trip data (including braking and cornering speed or acceleration), the time of day when driving, and the amount of time spent behind the wheel. Others ,can also be used to learn more about a driver. It can tell you how fast a vehicle is traveling, track a vehicle’s engine revolutions per minute (RPMs), and help calculate fuel consumption.
Portable Bluetooth devices
They have an added feature with using phone data instead of a sim card, as in OBD's, as well as give the ability to view performance on an app. These devices have various sensors installed such as a gyroscope to detect and evaluate driving behaviour.
Advantages of these Hardware Devices :
1-Great Data Accuracy
The accuracy attributed to connecting to a car's system is unbound,as it collects data firsthand and therefore is of low variation. With Bluetooth devices, the built in sensors can grasp and collect data sufficiently, given a good cellular connection.
2- Wide Applications
The potential additional applications, such as early car diagnostics are definitely useful, and can even unlock a great advantage when paired with other sensors or without, in industry such as logistics, for managerial purposes, where any truck or vehicle would benefit from readings such as fuel consumption, engine status and refrigerator temperature.
Disadvantages of such systems :
1- Physical Limitations
To begin , there are constraints surrounding the build of modern motor vehicles, as they include one OBD port, which opens up the inconvenience of taking up another device's place. Another concern would be with black boxes, as some countries, such as Saudi Arabia, prohibit car makers from installing these devices in cars shipped to the Kingdom.
2- Hardware Costs
The hardware costs are higher for OBD-II systems or bluetooth devices . Such telematics require the manufacturing processes, distribution and even installation procedures in some cases. Building a cost and profit structure can be difficult for insurance companies with such devices, as it's expected to not only provide them for free, but to add an initial discount to motivate customers to sign up. As for bluetooth devices, they require in most cases to be connected to a phone's cellular data, which can be inconvenient for drivers, as it may nessicate they upgrade their phone plans.
3-Compatibility Concerns
Whilst most cars after 1995 have an OBD II- port, not all of these devices are compatible with the vehicles deeming their data to be unreadable to the insurance companies.
4-Privacy Barriers
As mentioned, telematics are powerful tools equipped with advanced various sensors, such as a GPS. Not only can these devices track, but also register the time of day, the miles driven , and time spent behind the wheel. Whilst, these features can be beneficial for the driver, such as in the recovering of stolen vehicles , they may however, disencourage drivers from signing up up to such programs.
What could be an alternative solution to bypass such limitations ?
In addition to these solutions, there are more with further features and applications, such as the next innovation, which can add immense value and overcome any restrictions.
Smartphone Applications
A smartphone -based telematics device tapps into the existing phone sensor's such as the gyroscope, speedometer, GPS among others to evaluate the driver on metrics such as acceleration, braking, cornering and another important metric, which is mobile use.
An application, can sometimes be a hassle when it comes to driving with others rather on your own, but most applications, ask whether you were the driver when a trip ends, and some apps, much like Salamatk, can even study your driving pattern early on and understand when to score a trip or not. Such a limitation however, comes with the added benefit of bypassing any physicals barriers such an OBD port need, as well as in compatibility , as nearly most people have smartphones , making evaluating driver behaviour easier, no matter the car make and model. Furthermore, smartphones as an insurance telematics device, holds the lowest costs of any other tool, as it doesn't build upon what was mentioned, be it manufacturing, distribution, maintenance and installation, and is much more cheaper in circulation. Another plus, would be the gamified aspect of an developing safe driving habits, with Salamatk for instance, not only can you track your performance over weeks and months, but also compete with the community in a leaderboard. The competition is based on gathering safe driving exp, which amounts to levels, and the higher the levels the higher the potential reward, such as a insurance premium discount.
In conclusion, no matter the device selected as an insurance telematics , there is no one fit solution for all as they all have different upsides ,that cater to the need of the driver, and in many cases, these tools can be used in combination to get the best output and benefit for both the insurer and driver.
-Yazeed Almahi
Founder & CEO of Salamatk
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