Technology Saving Car Insurers

Black boxes have seen a dramatic rise in use across the UK in the last few years as more and more insurers offer them to drivers in return for cheaper insurance.

People are led to believe that the black boxes are being offered in order to monitor driving styles; with careful drivers receiving further discounts on their insurance premiums,

However, these little black boxes have another use that isn’t being shouted about as much but could be the reason behind these devices becoming a necessity alongside all insurance policies. The use? Getting data from car accidents.

As it stands, insurers are falling victim to billions of pounds worth of insurance fraud each year and have been struggling to combat it effectively. To date, insurers have only targeted the industry of claiming insurance, i.e. solicitors like us who act for the victims of car accidents.

These devices, that monitor speed, acceleration, braking, cornering – all aspects of our driving – are helping insurance companies weed out fraudulent “crash for cash” and personal injury claims, potentially saving the industry billions in losses every year.

There are about 12 million of these policies globally now, with the biggest markets being the US, the UK – which now has more than 450,000, a 40% increase on last year – and Italy.

That still only represents about 1.5% of the global market for insurance policies, however.

Fraudulent claims

Jonathan Hewett of Octo Telematics, which supplies the data and analysis that comes from black boxes , says it gives insurers a complete understanding of a crash – even if only one vehicle involved has the technology: “Telematics provides a much deeper set of data… that allows insurers to do that much better.”

As claims account for about 80% of insurers’ costs, being able to examine them forensically to determine liability – and whether drivers are making fraudulent claims – is crucial to the bottom line.

“You can understand the force of the impact, and thus the likelihood of things like whiplash and soft tissue injury,” Mr Hewett explains.

Another, perhaps unexpected, benefit of telematics is allowing insurers to become aware of a crash as soon as it happens. The boxes are usually connected to a vehicle’s diagnostics port under the bonnet or plugged into the 12-volt power socket in the cabin.

If the device detects a G-force above a certain level it automatically triggers a call to check if the driver and any passengers are unharmed, or alerts emergency services if needed, explains Scott Goodliffe of insurance broker Adrian Flux.

Technology that can automatically notify emergency services in the event of an accident will be compulsory on all new vehicles sold in Europe from April 2018 under the European Union’s eCall initiative.

The EU says this will significantly reduce the response times to crashes and could save hundreds of lives a year.

Allowing insurers to contact drivers faster following accidents will help stop “ambulance-chasing lawyers” getting involved, according to Octo’s Mr Hewett.

That gives them more control over the claims process, provides a better service to customers – and minimises costs.

“It’s as much about process efficiency as it is about financial efficiency” for an insurer, he says.

Good thing

So, are black boxes a good thing for insurers? Yes, definitely. But are they good for the average driver? Well, we’ll let you decide.