Driving

If you are a motor insurance company, the next time your client takes a turn too fast or slams the brakes at the last second, you will know.

If you are a driver yourself, you may be able to get wallet-friendly prices on vehicle insurance and even get rewarded for a solid record of safe driving and practices.

Raxel Telematics says it will soon track driver behaviour in Singapore with two products already rolled out to the market: FlexiMileage and DriveMaster. FlexiMileage is a small onboard diagnostic device that plugs into the dashboard and connects to the driver’s smartphone wirelessly. DriveMaster is a standalone mobile app that was launched this October in partnership with NTUC Income, Singapore’s leading composite insurer.

With these data-driven initiatives be the future for Southeast Asia’s insurance industry?

Potentially game-changing tech for the insurance industry

Raxel’s technology is known to the industry as insurance telematics or Usage-Based Insurance (UBI).

Such technology has tracked the safety and driving behaviours, particularly in fleets, for some time now, although the market exists mostly in the US and Europe.

Global UBI market penetration is currently less than one percent, however, expected market penetration in Europe, Asia and America is estimated to be 15 per cent by 2020, with the trend growing to nearly 50 per cent of the world’s vehicles being insured with telematics policies by 2030.

To date, there are 12 million active UBI policies worldwide, according to Ptolemus Consulting Group. The demand for hard-wired telematics devices is evident, in particular in Asia, where it is still a nascent field.

“Traditionally, insurers rely on their customers’ claim history and some basic social-demographics, but by taking a personalised approach, insurance companies can significantly improve the predictive power of their pricing algorithms,” says Dmitry Rudash, Raxel Telematics CEO.

Over the past two years, the motor insurance class, which makes up 32 per cent of the general insurance market in Singapore, is on the decline. The heightened competition and the falling car population — a total of 957,246 by end-2015 — were the major causes of this downtrend.

However, motor premiums are expected to rise by 5.2 per cent in 2016, making the field a compelling place to start the business and offer new solutions for customer retention or conversion in the insurance industry.

Telematics may introduce a competitive advantage to the Singaporean market with an array of more than 20 insurance options to drivers.

UBI has already become a more familiar concept across the SEA market when Southeast Asian ride-hailing platform Grab and AXA Insurance Singapore announced the launch of Southeast Asia’s first usage-based commercial motor insurance for private-hire car drivers in May 2016.

Plug and play (or drive)

Here’s how it works: A motor insurance company plugs the OBD device into the vehicle’s dashboard or use standalone mobile up for a set period (usually up to one year). Or, customers may use a ‘try before you buy’ app for six months, understand the full capability of the technology and get a special offer to extend the insurance agreement for the next year of coverage.

Both the OBD device and app, combined with the cloud platform and specially designed scoring model, will collect data in real time, track and timestamp mileage, and funnel all that data back to the insurance company.

The telematics technology thus revolutionises insurers’ approach to profiling clients by providing more extensive data and knowledge about driving habits.

Using this tech is a win-win situation for both users and insurance companies. Telematics opens up new revenue streams and regular touch points with a customer for insurers.

The tech assesses actual drivers’ risks and introduces better pricing opportunities. It also enhances customer retention and helps to gain better access to low-risk drivers. UBI can also reduce claim frequency, processing costs and accident disputes.

As for users, drivers will get notified of unsafe driving habits and receive reminders to drive safely. Users can can also get safety ratings that in turn may be exchanged into additional cost-saving benefits, such as personal offers or discounts on gas purchases–somewhat a gamified system for safe driving.

A move toward smarter cities

The start of algorithm-driven businesses in Asia could have major implications for industry players, consumers, society itself, and everything in-between. Thus, the popular connected car concept goes beyond simply having autopilot.

Data-driven initiatives like this one can also improve algorithm-based vehicle pricing, warranties, preventive maintenance, entertainment apps and so on. Telematics enhance communication across vehicle and driver, and it provides transparency where necessary.

“Driving just 20 Km/h over the speed limit in the city doubles the risk of an accident, while sharp accelerations, sudden braking and manoeuvring causes one in five accidents,” says Dmitry Rudash, Chief Executive Officer at Raxel Telematics. The startup’s system thus enables insurance company to better determine whether a client is at high or low risk of getting into an accident, and thus charge for premiums accordingly.

Transparency and safety issues actually compel some transportation platform companies (such as Uber or car-sharing firm Zipcar) to integrate telematics into their business.

As the automotive industry makes a big push toward autonomous cars, the largest automakers are collaborating with technology companies in their efforts to leverage robotics and AI. This includes, for instance, Toyota’s collaboration with Microsoft, or Volkswagen’s partnership with LG.

Telecommunications companies like Vodafone have also started offering Telematics Usage-Based Insurance, strengthening a significant market-building opportunity for every party involved.

A newcomer to watch out for

Raxel Telematics has recently moved its global head office from Russia to Singapore and opened the business development operations in Southeast Asia’s tech hub to grab the opportunities in this market, including Thailand, Malaysia, Indonesia and Vietnam.

The company may just yet play a big part in making Asian roads safer and in promoting low-risk driving habits.

It might also help insurance business grow. The company has compiled a large storehouse of more than 100 million Km of analysed risky-driving events and real claim data. Results for the company’s partner insurers have shown a 37 per cent average decrease in claim frequency and 7 per cent margin growth due to decreased risks of fraud.

To date, Raxel already has insurance partners in the Comonwealth of Independent States and Asia, including local industry leaders, such as NTUC Income (Singapore), and branches of key international players, namely Liberty Mutual (Russia) and AXA (Ukraine).

Raxel provides its partners with analytics, data processing and customer risk assessment services, supporting their usage-based insurance schemes for drivers.

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Image Credit: ambrozinio / 123RF Stock Photo

Author Viola Serdiukova is a tech-savvy blogger interested in startups. With an experience in the Skolkovo Foundation and a University-based business incubator, she chanced to meet daring founders throughout the world. In 2015 while studying at Boston University, she gained deep insights about how the startup culture in Boston and NYC has evolved.

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