What Are The Four Key Factors to Consider When Selecting Vehicle Enablers for Telematics Data Collection?
The automotive insurance market is undergoing a major change thanks to the introduction of several new telematics vehicle enablers for data collection, from smartphone and OBD devices, Bluetooth® wireless technology-enabled beacons, 12V connectors, OEM to a hybrid solution combining various vehicle enablers. Each system has its advantages and disadvantages, but what are the four things you really need to keep in mind when choosing your telematics data collection solution? We’ll explore that very question in detail below.
FACTOR 1: THE OBD-II DEVICE HAS BECOME A PREFERRED CHOICE FOR ACCURATE AND RELIABLE TELEMATICS DATA COLLECTION
Although telematics insurance is still a relatively new automotive insurance model, the OBD-II-based data collection solution has been around for some time. For roughly twenty years mechanics have been using this system to learn more about an automobile’s health – an increasingly important tool given the growing presence of electronics in the average consumer vehicle.
Now, the OBD-II platform is being used to help automotive insurance companies collect information about their clients. The system involves the production and distribution of specialized devices that plug into the OBD-II port and then wireless transmit data to the insurance provider. That information shows insurance firms how a client drives, from their acceleration, braking, and cornering speeds to the time of day they typically hit the road.
The primary advantages of this system are clear: it’s time-tested, extremely accurate, reliable, and secure. Insurance companies have been using these devices for several years now and the system has proven to be highly stable. Not only does it support numerous connected car/value-added services, it’s been resistant to hacker attacks – an important fact given the importance of safety to drivers and personal data protection.
FACTOR 2: THE SMARTPHONE-BASED DATA COLLECTION OPTION PRESENTS A UNIQUE, COST-EFFECTIVE OPPORTUNITY FOR INSURERS LOOKING TO ACCELERATE THE ADOPTION OF INSURANCE TELEMATICS
Although it’s a relatively new data collection solution for telematics, insurance providers are making the shift to using smartphone technology to help monitor driver behaviour, allowing them to cut costs while still collecting the accurate data they need to make insurance telematics programs a success. Why is it so cost-effective? Because it relies on a driver’s own mobile device, existing mobile data plan or wifi network – meaning an insurance provider doesn’t have to worry about building and distributing a device that plugs into the vehicle. And with virtually everyone now owning a smartphone, there’s a huge market for this telematics solution.
FACTOR 3: DESPITE ITS POTENTIAL, MOBILE TELEMATICS DATA COLLECTION HAS A FEW CHALLENGES
Of course, there are a few challenges with the widespread availability of smartphones: first and foremost, there isn’t one single mobile operating system. Most people use Android devices, but there’s no denying the popularity of Apple’s iOS platform. Also, Microsoft’s Windows mobile OS is slowly but steadily growing its place in this highly competitive market.
That makes it challenging to develop a telematics data collection system and apps that will work with every single smartphone and operating system. Furthermore, the popularity of smartphones is drawing the attention of hackers, who could use malware designed for mobile devices to infiltrate a data collection system therefore insurance providers need to ensure their mobile telematics app’s are secure and in compliance with industry standards.
FACTOR 4: THE HYBRID SOLUTION BOASTS THE MOST POTENTIAL
Given the pros and cons of various vehicle enablers, many insurance companies are exploring the idea of a hybrid data collection system. Ideally, this solution would feature the advantages of integrating multiple data collection options. It’s no shock that the concept is becoming more popular in the telematics market.
The vast majority of hybrid telematics solutions employ Bluetooth wireless technology and a vehicle’s OBD-II port. Not only does this allow for impressive data quality, but it enables insurance providers to securely transfer data. Furthermore, as the system uses a driver’s own smartphone, the hybrid solution tends to be cheaper than the OBD-II alternative. And because it uses mobile technology, the hybrid solution opens the door to the use of value-added services, like smartphone-based applications available through distribution systems like Google Play. These services can help drivers learn more about incoming weather systems, nearby traffic problems, and how to reach their next destination.
Looking down the road, it’s possible the enormous potential of the hybrid solution could help it play an important role in the development of automotive telematics. But in the immediate future it’s likely on-board diagnostic systems will remain the favourite, with ABI Research predicting that over 117 million subscribers will be using OBD-II devices by the year 2019. That represents remarkable growth given that there were less than ten million OBD-II aftermarket devices being used in 2014.
We recommend that anyone interested in reviewing and exploring data collection options contact an experienced, knowledgeable telematics provider. They can help you with a cost-effectiveness test that measures the costs and benefits of prospective telematics programs and devices, including OBD-II, mobile, and a wide variety of hybrid options.
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