Why is connected car data relevant for insurance companies?

We will go into detail about how and why insurance companies can benefit from utilizing connected car information.

Vehicles that were produced after January 2016 have the option to send valuable information for insurers directly from the car. The types of information connected cars are creating are:

  • fuel status, driven distance, electric vehicle battery status, vehicle lock status, lighting, rooftop, door positioning status, and more.

The type of information that is been send depends on the car manufacturer providing the information.

More real-time data provides opportunities insurance companies cannot afford to miss in this hyper digitalized and personalized age. They surpass the obvious usage-based insurance use cases and open new horizons.

How is connected car data different from other telematics data sources?

The choice of the best data source really depends on the business goals of the insurance company. There are 3 basic sources: a black box, smartphone-based telematics and the car itself.

Black box data vs. connected car data

Black box devices such as dongles and beacons can be connected to a car’s diagnostic port and gather information from the vehicles. Even though these devices provide reliable data that is useful to the insurance companies, there are certain logistics and support challenges connected to using them as a reliable source of information.

At the implementation stage, they can be expensive to implement. Even if we ignore the cost of the device, they require a SIM card to send the data, a visit to a service center where the physical device will be placed into the car. Ongoing maintenance of all issues that arise with operators and regular replacement of devices after their batteries die, which requires another visit to the repair shop. 

The biggest advantage in black box devices is seen in the used vehicle market because they can get information that would otherwise be unavailable for these vehicles, like the battery status, error codes for minor issues that would not cause the driver dashboard light to switch on, etc.  

Car manufacturers started implementing blockers into newer vehicles to prevent devices from being plugged in and to assure that official car manufacturer service centers and programs are being used.

On the other side connected car data is relatively easy to get a hold of. You only need a data provider, like Amodo, and signed consent from the vehicle owner. Compared to black box data, it is cheaper and easier to get a hold of. 

The limitations here are that you can only get a predefined set of information the car manufacturer defines, and it is not possible to perform detailed scans of the vehicle as it is with dongles. It is also possible to get the information only from vehicles produced in January 2016 or later. 

The good news is that if this information is used to increase the top-line goals, this is the perfect segment for customers that are ready to spend more to get a premium service. Information such as mileage is precise, comes directly from the car and minimizes the chance of fraud in cases like pay per kilometer insurance.

Smartphone data vs. connected car data

Smartphone data is very accurate and reliable if the location services are on in the mobile phone and if the application has an automatic recording. In case manual recording is required, it is possible to record only trips that the driver wants to record. 

There are different gamification and engagement tactics that can be employed in order to increase the reliability of smartphone data. Smartphones are useful as they are always close to the data source (the person being insured) and can help gather more useful information than just the car movement. A person’s whole life and lifestyle can be decoded based on movement patterns.

While smartphone data needs to be cleaned from the noise, connected car data is available off the bat. It can be enriched and contextualized using information smartphone data, but in most cases, there is no need to add this additional context. One aspect connected car data misses is the ability to communicate to the end customer and monetize. 

Choose the right data source

The data source you’ll use in your company depends on your business goals and uses cases that fit in with those goals. Amodo can provide information coming directly from the connected car through an API. We can also provide an app or SDK that would help you get insights into customer behavior. 

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