Vehicle makers to get more involved in telematics-based insurance: report

Vehicle electronics products such as Ford SYNC, GM OnStar and Hyundai Blue Link will increasingly be used to offer usage-based insurance to auto policyholders, suggests a Frost & Sullivan report released Thursday.

Vehicle manufacturers’ involvement in telematics “is at a very basic level” right now due to concerns about privacy and other issues, according to the “market insight” report on telematics-based insurance.

“However, over the longer run, insurance is expected to be a key offer in a bundled service with telematic infrastructures, such as OnStar or Blue Link, among others,” wrote Praveen Chandrasekar, research manager for automotive and transportation at San Antonio, Texas-based Frost & Sullivan.

“With increasing (original equipment manufacturer) involvement, telematics-based insurance is definitely poised for greater growth than being a niche aftermarket regional value proposition.”

The Frost & Sullivan report focussed on Europe and the U.S., where the research firm noted telematics is a “mainstream offer” from 60% of U.S. auto insurers.

“Ford and GM have offered milage-based insurance discounts utilizing their respective telematics infrastructure, such as SYNC and OnStar, in the U.S. since 2010,” Chandrasekar wrote, adding both auto makers have partnerships with State Farm. Chandrasekar suggested in the report that GM and Ford are only currently offering milage-based underwriting, rather than driving behaviour.

However, Chandrasekar wrote, many wireless telecommunications carriers “are already eying (the telematics) space in direct partnership with technology providers,” and that GM plans to integrate Long Term Evolution (LTE) cellular technology (which has a theoretical top speed of 150 megabits per second) into OnStar to let carriers use “advanced driver behaviour analysis.”

In Britain, Chandrasekar noted, GM’s Vauxhall Motors subsidiary offers a telematics service in partnership with Ingenie Services Ltd. Ingenie’s devices collect data on driving habits such as cornering, swerving, braking, speed and acceleration. Ingenie’s policies are underwritten by Ageas Insurance Ltd. and Royal & Sun Alliance Insurance Plc.