Telematics Device Reviews: The right telematics data collection technology can make or break your telematics insurance and usage-based insurance program strategy at a time when consumer behavior is changing rapidly.
As insurance telematics and the global usage-based insurance (UBI) market have grown substantially over the last few years, the technology choices for implementing insurance telematics programs which reward safe drivers based on their driving patterns have now become even more diverse, staying on top of technological advancement and telematics trends is important for insurers to stand out and be successful.
Techniques for collecting, consolidating, and analyzing the data to assess driver behavior continue to be refined as the technologies for accomplishing this evolve and improve. With so many available technology choices, one question is frequently asked by insurers: What data collection option best suits the programs we want to offer drivers?
The insurance industry has always been data-centric, but telematics adds extra dimensions of volume, timing, and large-scale processing to the equation. A substantial challenge exists: the workload involved in capturing, processing, and analyzing information from telematics devices on millions of vehicles. Telematics devices typically produce data records which can include G-force values, date, time, speed, location, cumulative trip mileage, fuel consumption, and more. The quality, scope, and precision of the data depend on the type of telematics device that is capturing and transmitting it. The ultimate goal is to use the driver and vehicle data collected, combined with insurance claims data and other information to perform analyses to accurately identify, predict, and influence driver risk and claims losses.
How to Choose the Right Telematics Device? From the perspective of the insurer, particular kinds of information are vital to assessing and grading driver behavior—regardless of the equipment that collects that data. Each of the data collection solutions discussed in this article—smartphone, self-powered, OBD, black box, and OEM embedded devices—have varying pros and cons. Rather than favoring any one approach over another, we discuss how each solution has certain strengths and weakness that may make it effective for one type of insurance program, but perhaps not another. Check out these five in-depth professional unbiased telematics device reviews and transformative data collection technology solutions that matter most to leading insurers to stay relevant and meet the challenges of tomorrow.
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- Smartphone Data Collection
- Self-Powered Data Collection
- OBD Data Collection
- Black Box Data Collection
- OEM Embedded Data Collection
Telematics solutions based on smartphones avoid installation costs while providing reasonable data accuracy and they can also provide a variety of custom features through apps. These solutions offer a straightforward path to telematics data collection through the smartphone’s data transmission capabilities, including cellular data and WiFi.
With the diversity of smartphone makes and models, as well as different sensors, algorithms must be applied to normalize the data that is collected, stored, and analyzed. Once the data is normalized and the other considerations addressed, smartphone telematics solutions can be successfully incorporated into a variety of telematics insurance programs.
Devices in this category include the battery-powered Bluetooth®-enabled beacon, which is often mounted on the dashboard or windshield. Deployment costs are minimal, making this a cost-efficient choice for mid-range to mainstream insurance telematics programs. Bluetooth connectivity with devices, however, can be a challenge for some users.
Flexible self-powered options include both devices that communicate directly with servers using their own cellular modules, in addition to devices that tether with the smartphone and use the smartphone’s cellular capabilities to get data to the server.
Tethered smartphone connections can increase customer engagement and flexibility. Vehicle identification data is captured and can be harvested later, even when a smartphone is not present in the vehicle. Data transmission can also be performed using the smartphone communication and data plan capabilities, which eliminates the need to set up separate communications through the Bluetooth hardware.
Self-powered devices that communicate directly with servers minimize customer interaction, however, there is a tradeoff with a smaller density and duration of data that can be captured and transferred with this option.
The OBD-II interface, which has been a federally mandated feature on all US vehicles since model year 1996, is one of the earliest technologies for vehicle telematics data collection. The equivalent standard in Europe is called EOBD (European On-Board Diagnostics).
As a long-running, well established solution in the marketplace, permanently plugged-in OBD devices have a proven track record and high level of acceptance. Driving data is typically transmitted directly over cellular networks for processing. This moderately priced option can be combined with smartphone connectivity to enhance driver engagement.
As the de facto standard for UBI programs in the UK, black box technology captures and delivers a stream of data from active vehicles using a cellular service for communication. A fixed electronic device—the black box—securely mounted inside the vehicle ensures that accurate trip and collision data is obtained and transmitted to a data center.
Popularity of this approach is especially high in regions where vehicle theft is rampant, offering a proven, tamper-resistant method for prompt recovery of stolen vehicles. However, these aftermarket devices must be professionally installed in vehicles, leading to higher installation costs.
Data extracted directly from built-in vehicle sensors eliminates aftermarket installation costs, but a lack of standardization among OEMs has impeded market acceptance. Expect to see innovative programs developed over time to take advantage of these built-in capabilities, which could lead to highly accurate data capture, new ways to monitor driving, and integration with driver-assistance features that could improve safety and reduce crash frequency and severity.
Although this form of data collection for insurance telematics is relatively uncommon today, a TSP equipped to integrate with embedded car systems and make sense of the disparate data will be able to tap into the benefits for both insurers and their customers as the technology matures.
Data Collection Considerations
Telematics programs differ widely. Selecting a data collection solution should be based primarily on client needs and program objectives, as well as the options that best support the solution. For example, commercial programs present very different needs and requirements than a personal lines program. A telematics solution focused on lead generation and customer acquisition will, by nature, differ from a more comprehensive implementation (and might initially use a smartphone for collection and then later replace it with an OBD device or a self-powered device using Bluetooth).
As these technologies continue to evolve, other factors—such as differences in the characteristics of certain consumer segments—can weigh into the evaluation and influence the selection of the most appropriate telematics data collection approach to meet the challenges. We recommend that you consult an experienced telematics service provider (TSP) with a platform and strategy that is fully data agnostic to investigate and evaluate the trade-offs and capabilities of all technology solutions – and never assuming you are forced to one or a limited number of data collection options.
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