An insurance firm has warned businesses that big data could hike up premiums to the extent that fleets become uninsurable.
Big data is the term for the exponential growth and availability of data from a wide variety of digital sources, sensors and mobile devices. It’s being used by car manufacturers to collect huge amounts of information on driver habits and their how their vehicles are used.
Speaking at the BVRLA’s Fleet Technology Conference earlier this month, Alan Cottrill, managing director of usage-based insurance specialist Trak Global Solutions, said greater access to data by insurance firms could expose fleets with risky drivers.
“We’ve seen crashes in the rental sector that have been absolutely predictable. Drivers have been doing 130mph, 140mph, then that’s resulted in the M1 being closed. Any rational risk manager would have taken them off the road and taken the car off them.
“But as a fleet market, that might be the most productive sales person that business has, so how do you incentivise them if you take them off the road? The question is, how do you take data from any of the sources we’ve talked about [at the conference] – whether it’s a connected car or an app – and turn that into something useful?”
Cottrill explained that usage-based insurance offered cheaper initial premiums but that drivers and companies stood to lose out if they were revealed to be driving dangerously.
“To summarise [usage-based] insurance: it’s cheaper. We record the data and we use it against them. That’s what we do. Any declaration we make, we validate with the data, and if we don’t like what we see, we get rid of them.”
He claimed that the more access insurers had to data, the more likely it would be that fleets would see their premiums rise: “From an insurance and fleet point of view, I think there are going to be implications around the data that at the moment we’ve not fully explained. And I think we need to understand that, because if the cost of repairing your cars goes up, your insurance is going to go up, and for certain fleets that might mean they’re not insurable any more, and I think that’s a real risk.”
He continued: “The challenge is for [fleets] to use the data for your fleet to be managed in a way that means you can get insurance.
“I reiterate the point that from an insurance perspective, we use the data against our own consumers. It’s a strategy that works because it means we can return them a cheaper premium when we’re selling.”
