IoT, insurance and the future of connected cars

Andrew Bennett, CEO of Coverbox, explores the tech behind telematics and the powerful little black box capable of communicating one-second data over the cloud

History is a strange thing, what can be taken as commonplace now we often forget was transformational at the time of adoption. Cases in point include the onset of computer-generated quotations, the use of emails for communication and online purchasing through price comparison websites.

All of these have revolutionised the insurance sector, all of which were often resisted, adopted and then became part of the landscape. More recently telematics and the application of data is trumpeted from all parts of the insurance sector, but again we see resistance and reluctance before we reach acceptance.  Self-knowledge is key, we all know data is already transforming our daily lives and it will be so in insurance too as telematics become integral to our daily mobility going forward.

AI and ML

The adoption of AI has begun to transform call centres and online journeys along with claims handling and document processing.  In fact, almost every element of the insurance business is changing albeit slowly.

We hear talk of radical shifts in workforce requirements as result of automation.  Insurers and brokers need to retrain staff in using these technologies, which will ultimately require less people to function. In a growing business like ours it’s a great position to be in, but it will pose challenges in businesses with low growth. It is coming and again in no time it will be commonplace.

Machine learning is fundamental to Coverbox’s proposition and our technology partner Insure Telematics Solutions. We have seen a great leaps forward in the ability to accurately detect and diagnose an accident all generated through complex algorithms accelerated by the use of machine learning. We are a small company with big ambitions, consequently working with leading edge providers like Insure Telematics Solutions is essential.

Path to Adoption

Coverbox was an early adopter of telematics. When few other players within this niche market had the ability to provide a true end to end service, Coverbox had its own rating engine and was already developing machine learning.

As we move towards sourcing data from the actual car in the interim, the reach of telematics will only increase.

Data Sourcing, IoT & The Cloud

Coverbox works with its partner Insure Telematics Solutions to using a combination of data from our own policyholders plus imported overlays which have provided the foundation of our anonymised data lake.

With one second data being collected for each and every policyholder, across all journeys made by their vehicles, that equates to billions of lines of data. With telematics boxes completing millions of miles of journeys the data builds exponentially.

The data that comes in is interpreted and generates a further layer of data, providing a massive range of insight. Data is generated on driving behaviour, which includes speed, acceleration, cornering, braking along with geographical locations, times of movements all of which can be extrapolated to give truly actionable management information.

Road to Connected Vehicles

However, there are a number of technological challenges that must be overcome before we see a network of connected vehicles, not least smarter road furniture (traffic lights signs and so on) and 5G data connectivity which is still patchy. Automation is however an output of data analytics and the more situational data that is collected and interrupted, the closer we get to full adoption.

In the next three to five years it is highly likely that some motorway driving may become automated.  As smart infrastructure comes online these vehicles will talk to each other. The key to success however is how well these early automated vehicles interact with non-automated vehicles.

We anticipate that the main propulsion of these will be electrical power with the consequential challenge of recharging. Problems that will need to overcome beyond providing a practical charging network include: battery capacity, moving the car from occasional use vehicle to a fulltime sole car within a family unit.

In addition, the potential hacking of vehicles software will present problems of security. All vehicles will have to operate independently in an environment that according to a 2015 survey from the leading analytics firm Gartner will deliver by 2020 upwards of a quarter of a billion connected vehicles across the world.

The actual connectivity problem is relatively simple to solve, however as we’ve seen with telematics box deployment and manufacturer original inbuilt telematics, the integration of multiple devices and stand-alone products has led to over complication and an unwillingness to collaborate. This will change as the commoditisation of data is realised: huge revenues will drive huge adoption.