There’s been a lot of talk by insurers and regulators as of late, that before long, we could be looking at opt-out telematics clauses with insurers, rather than current opt-in systems, or at the very least, such big price hikes for those not using the technology – the equivalent of the highest risk category drivers today – could find themselves priced off the road as soon as 2024. However, not all insurers agree and in-fact, several are keen for consumers to remain in the loop on the decision of including telematics hardware in their car, citing freedom of choice as an important consideration for them.
While that might sound like pandering to the masses that don’t want to be tracked on every drive they make, it does show a measure of competitiveness, as there will indeed be those that don’t want to have telematics hardware in their vehicle, no matter the benefits – so there will likely always be a market for those drivers. It might be an expensive one, but it’ll be there.
Go Compare innovation and insight head Tom Lewis, however, is firmly behind the telematics revolution and believes we’ll be looking at opt-out systems sometime in the next decade for at least some insurers:
“As the cost of devices comes down and we move away from pre‑installed devices, the penetration of telematics will continue to grow. As soon as it gets to a 50% penetration, the rest of the market will come along fairly quickly.
“We will see a move away from pay‑as‑you‑drive policies to an expansion to standard‑type policies that are underpinned by telematics. You will still pay an annual fee but there will be a telematics device included or an app usage requirement, and that data would be used at the point of claim or to set renewal prices or mid‑term adjustments,” he said.
Not everyone agrees though. Business performance head at Insure the Box, Stephen Humphrey said that the timing is just too tight. As it stands, telematics acceptance in the commercial and consumer sectors is still quite low and for that to snowball to a point where there are more users than non-users, would be very difficult to achieve in ten years.
Others push the business ideals aside though and looked straight to the morality of opt-out systems. Richard King from Ingenie, that offers telematics based insurance to young drivers that want big reduction on their premiums, said that his company discussed making telematics mandatory for those that have just passed their tests, since it helps them avoid fines, accidents and makes it affordable for them to drive on the road.
But in the end, they decided it just wasn’t a good idea.
“The minute you make anything mandatory, people will spend most of their time and effort trying to find a way to fight or beat the system,” he said. “We should make the benefits so obvious and apparent, without any curfews or restrictions, that people see the benefit and then opt in.”
Others pointed out that telematics didn’t automatically make people better drivers either, but encouraged them to do so. It defeats the point of the system if drivers are forced to take it on, as none of them will have to drive more safely, they’ll just be monitored while they do it.
“Telematics is a very pro‑consumer thing and a lot of the benefit is that we give customers the opportunity to decide whether they take [and act on] it,” said DLG motor insurance’s Gus Park (via POST).
What do you guys think? Should telematics always remain opt in, or is there a time in the future where you see opt-out becoming more prevalent?
Image Source: MBWA PR
