Telematics has allowed insurers to tap into data-driven tech. Here’s how it’s changing the claims process.
In the past three years, we’ve seen seismic changes in the way we do business. A global pandemic redefined the workplace and how we communicate with colleagues. Online shopping and the rise of deliveries has altered how and when we consume goods. The gig economy has changed how we use services. It seems only natural that the way we use insurance would follow, and so too the way insurers do insurance, specifically the claims process.
Worldwide trends are showing that this upgraded version of insurance is driven by considerable improvements in telematics technology.
Statistics show that this shift to data-driven insurance is already showing on a global scale. A report by TransUnion, a global company specialising in risk solutions across a variety of industries, shows a considerable surge of vehicle telematics adoption. Last year, for example, there was a 33% rise in clients switching to telematics-based policies.
The researchers discovered this increase was a response to a global spike in inflation, showing a perception among consumers that telematics may offer a cost-effective insurance solution.
In the past, insurance often took a one-size-fits-all approach, but today’s technology allows insurers to drill down deeper into the intricacies of each client and their policies.
Increasing accuracy
The continuous move towards tailor-made insurance requires an emphasis on accuracy, especially in car insurance. Given the statistics and variables associated with driving from point A to point B, vehicle telematics is an excellent means to illustrate this in action.
“Telematics utilises real-time data collected from vehicles to assess driver behaviour and driving patterns,” says Phila Maboa, General Manager at Netstar. “This data includes factors such as speed, acceleration, braking, cornering and even location.”
It gives a much clearer impression of the driver behind the wheel. By analysing this data, insurers can more accurately assess the risk profile of each individual driver,” Maboa emphasises.
The consequences of recording data and processing it effectively manifest in the drivers’ behaviours. Through telematics they’re presented with incentives. “Safer and more responsible drivers are rewarded with lower premiums, while riskier drivers might face higher premiums,” says Maboa.
This personalised approach can lead to more accurate premium calculations and fair pricing for clients, he explains.
The ethos of focusing on an individual is more in line with the way business is conducted internationally, with an emphasis on the client being cared for directly.
Not all accidents are equal
Telematics technology goes beyond simply recording and rewarding driving behaviours. Telematics devices can also provide valuable data in the event of an accident, Maboa points out. “For example, they can record the vehicle’s speed, impact force and direction of impact. This information can be used to reconstruct the accident and assess the extent of the damage.”
A tool against fraud
It’s the surety in the data that helps combat insurance fraud, which is increasingly prevalent in South Africa. A recent report from the Association for Savings and Investment in South Africa (ASISA) showed that in one year, insurers detected fraudulent insurance claims of R787.6 million across all lines of risk business.
Once these claims are presented with conclusive, irrefutable data-driven information that reveals such an in-depth account of an incident, telematics has the potential to become a very effective barrier against fraud and exploitation.
As Maboa explains, “Insurers can use this data to validate claims and prevent fraudulent claims, as the collected data offers objective evidence of what transpired during the accident.”
Less operational costs
In the traditional insurance claims process, each vehicle accident once meant an arduous series of assessments and plenty of administration to follow it. Today, access to highly-detailed data means insurers are presented with an option for efficient claims processing.
Telematics can streamline the claims process by automating various tasks, explains Maboa. “It can facilitate immediate and accurate reporting of accidents, reducing the need for extensive paperwork and manual reporting,” he says.
“Additionally, real-time data can provide insights into the circumstances of the accident, which may reduce the need for extensive investigations,” he notes. “This can result in cost savings and a reduction in administrative red tape that was more common in traditional claims processing.”
In real time
The key in this red-tape-slicing technique is its instantaneous nature. “Telematics provides real-time data to insurers, allowing them to assess the situation quickly and make prompt decisions,” says Maboa.
Being in a position to make crucial decisions brings several invaluable benefits with it. “This can lead to faster claims processing, as insurers can promptly verify the details of the accident, assess the damage and authorise repairs or settlements,” he says.
Notably, having access to real-time data behind human behaviours also means a level of monitoring to change the driving habits of oneself or one’s employers. “Quick and efficient claims handling enhances customer satisfaction and helps clients get back on the road sooner,” Maboa says. Customer satisfaction is the key phrase here.
“The use of telematics data to personalise premiums and policies based on individual behaviour fosters a sense of transparency and fairness,” Maboa says. “Clients can better understand how their premiums are calculated and take control of their insurance costs by adopting safer driving habits.” The possibility of reduced costs is a powerful drawcard to telematics, and it’s being proven in the commercial freight sector. According to research conducted by the Telematics Wire Market, statistics show that fleet owners who have integrated telematics consoles into their day-to-day business operations have reduced their fuel costs by as much as 14%.
Adding to the savings, there’s a feeling of fairness amidst the potentially confusing realm of insurance claims. “This approach can lead to increased customer satisfaction, as policyholders feel that their insurance rates are based on their actual driving behaviours,” says Maboa.
With all statistics and research findings pointing to a global demand for telematics, where does South Africa sit in relation to the rise in telematics adoption?
Maboa explains that it may come down to South Africa’s own regulations in the country’s insurance sector. “While the adoption of telematics in the claims process has the potential to enhance various aspects of the insurance industry, the extent of its impact may vary depending on the specific practices and regulations within the South African insurance market,” he says.
“It’s essential to consider the local context and developments when assessing the influence of telematics on the claims process in South Africa.”
South Africa, with its uniquely diverse demographics and dependence on logistics, and with its demand for clients to be catered for as individuals, presents an excellent landscape for telematics technology to thrive. And with this new innovation comes a demand for quicker claims, detailed data to improve drivers’ behaviours and ultimately a stronger relationship of trust between the insurer and the client.