How insurers can make driving cheaper, safer, and more sustainable
Cambridge Mobile Telematics (CMT) is the world’s largest telematics service provider, utilising AI-driven technology to collect sensor data from smartphones, proprietary tags, connected vehicles, dash cams, and third-party devices. With their extensive experience in connected insurance and the recent acquisition of European TSP Amodo, CMT shows how telematics can reduce road risk, provide drivers peace of mind with crash assistance, and lower emissions. We sat down with Marijan Mumdziev, CMT’s European Managing Director and the former CEO of Amodo, to discuss the significance of offering consumers a broad range of telematics products, from insurance discounts to safety, to lower emissions and fuel costs, and how it helps insurers meet Europe’s new sustainability requirements.
What mobility challenges can insurers help solve today?
First and foremost, it is essential to understand what drivers want. Everyone has different needs, but it is useful to focus on three key categories. Firstly, drivers want to pay less for insurance. In challenging economic times like these, individuals are looking to cut costs and manage their budgets more efficiently. Additionally, drivers aim to prioritise safety for themselves and their families. They want assurance that adequate support will be provided in case of any unfortunate events. Lastly, drivers are increasingly concerned about climate change and are seeking ways to make a positive impact, but are unsure of what actions they can take.
How is telematics helping to address these challenges?
Telematics insurers in Europe have taken significant steps to cater to these needs, with HUK-Coburg being a notable example. Their behaviour pricing model enables drivers to reduce their premiums by up to 30%. This is a remarkable benefit for drivers because they do more than just save money. With pricing based on actual driving risk instead of proxies like address, drivers are also in control of how much they save: the safer they drive, the more they save. For insurers, behaviour pricing proves to be an excellent approach for building profitable portfolios. Telematics factors are highly predictable, and insurers have reported 20-60% lower loss costs from their connected insurance books. Moreover, as safer drivers are more engaged and rewarded through telematics, insurers benefit from higher retention rates, experiencing a 2 to 9 percentage point increase.
HUK-Coburg has gone even further, launching two new initiatives. Last year, they began offering their 450,000 Telematik Plus customers free crash detection services utilising CMT’s app + tag technology. After a motor crash, drivers are automatically contacted and provided with emergency- or roadside assistance, depending on the severity of the accident. This significantly speeds up the claims process, as all the necessary information is instantly generated by the app and shared between the driver and the adjuster.
Recognising the desire of their drivers to contribute to environmental sustainability, HUK-Coburg also introduced Eco Drive. This feature evaluates sustainable driving behaviour based on factors such as speed, acceleration, and route characteristics. Drivers earn points for demonstrating eco-friendly driving practices, which accumulate throughout the year. HUK-Coburg then converts these points into donations to three charitable organisations.
Why does sustainability in insurance suddenly matter, and what does it mean?
In recent years, we have witnessed devastating floods in Italy, droughts in Spain, and forest fires in France, among other extreme weather events. These occurrences incur billions in losses for insurers, and their frequency and cost are on the rise. Notably, losses from extreme weather-related events are 18 times higher than those caused by human activities.
All insurance sectors are affected by these events. While we cannot prevent climate catastrophes, there are extensive regulations compelling insurers to bring about change on multiple levels. The upcoming replacement of the Non-Financial Reporting Directive by the Corporate Sustainability Reporting Directive will enforce more stringent and transparent carbon emissions reporting. This presents an opportunity for insurers to demonstrate their commitment to reducing environmental impact, aligning with corporate initiatives.
In addition to regulatory pressure, there is a growing expectation from drivers themselves that insurers take the lead in acknowledging the urgent environmental challenges we face. A recent survey by the Office of National Statistics revealed that climate change is the second biggest concern among adults (74%), with the rising cost of living as the primary concern (79%). A recent CMT survey, focused on European drivers’ perspectives, found that 82% are concerned about rising greenhouse gas levels, yet only 63% have taken steps to reduce their own emissions, with an additional 30% unsure how to do so.
Furthermore, many drivers prioritise addressing the high cost of living and fuel price instability, resulting in heightened awareness of fuel consumption.
What actions can motor insurers take regarding drivers’ emissions, and why should they?
It is crucial to recognize that responsible driving practices, such as avoiding harsh acceleration and braking, maintaining appropriate speeds, and minimising unnecessary trips, can significantly reduce emissions. These drivers also demonstrate enhanced safety and fuel efficiency. Safe driving equates to eco-friendly driving.
Telematics technology allows insurers to accurately measure customers’ emissions and provide feedback on emission reduction strategies. Transportation-related activities typically contribute to approximately 25% of an individual’s carbon footprint, making motor insurers well-positioned to assist in emissions reduction efforts.
How can insurers learn more about the sustainability solutions that are available today?
At ITC DIA Europe, CMT covered the European insurance landscape and reviewed what the most advanced connected insurance programs in the world are doing today to reduce risk, provide drivers with peace of mind, and improve sustainability efforts. The presentation also showed how CMT is addressing consumer demand for products that help reduce carbon emissions and fuel costs, and how insurers can add these kinds of programs on top of their existing efforts.