Around the globe, insurers are using vehicle telematics as part of their car insurance ecosystem. While telematics is used widely in countries such as South Africa, Italy and the United Kingdom, this data-led approach has yet to be fully utilised in Australia and New Zealand. 

Telematics is a powerful tool for insurers. It not only helps claims teams streamline the claims process and prevent fraud, it can also help drivers avoid the incidents that lead to claims in the first place, reducing loss ratios.

Limiting losses

Worldwide, 62 per cent of new cars sold in 2020 had built-in telematics, and there are plug-and-play telematics units and mobile apps for cars that aren’t preinstalled with telematics hardware.

Drew Schnehage, managing director of Innovation Group Australia, has watched how telematics use has developed in South Africa over the past 10-plus years, largely in response to the growing number of vehicle hijackings and thefts. 

‘Today, about 80 per cent of vehicles that are insured through an insurance company in South Africa have a telematics device fitted,’ she says.

‘The big insurers such as Discovery Insure, OUTsurance, Santam, Old Mutual and Hollard all use it in their car insurance products. ‘The insurer’s data and analytics teams deal directly with the tracking companies to access the telematics data.’

Because this data includes the location of the car, insurers have a greater chance of recovering a stolen vehicle, reducing the cost of the claim. This functionality has also driven the 25 per cent penetration of telematics in Italy, where stolen cars constitute one of the most common car insurance claims types.

That same location data helps reduce fraudulent claims and claims investigation times, too.

‘You can immediately verify what the driver is saying, using the data you receive via the telematics device to check it all lines up,’ says Schnehage. ‘If a claim triggers one of your built-in fraud indicators, then you know that you need to investigate further. 

‘It helps the claims agent focus on the issue that stands out, without a drawn-out investigation and a delayed claim. You can short-circuit that whole experience because you’re connecting all this available information.’

Collision course

Beyond vehicle theft, telematics can also help claims teams reduce fraudulent collision and personal injury claims, using information about a vehicle’s location and speed.

In QBE’s 2021 Australian claims data, the most common car insurance claim was for a vehicle collision — either with another car or with fixed property — comprising 63.2 per cent of all car insurance claims. 

Michael Graham, CEO of commercial motor insurance and fleet management company Mercurien, shares his own example of telematics in action: ‘We had a client who received an $8,000 letter of demand for damage that a driver in a company-branded car had done to a third party.

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