Realizing the potential of connected car data – it’s complicated
As more and more connected vehicles hit the road, the more and more companies think about the value that will be generated from the data that comes from the cars. Some say that the data will be a ‘goldmine’ for auto manufacturers. I wouldn’t go that far, but we can all agree that the data from connected cars represents a significant opportunity for auto manufacturers to create new and innovative business models. But now that roughly half of the cars produced in the US this year will feature some level of embedded connectivity, is it too late for auto manufacturers to capitalize on the opportunity?
There are hundreds of new and relatively untapped data types available from the various sensors in cars. Whether it be from the wiper blades, seatbelts or automatic braking systems, carmakers are gathering this data and using it for research and development to improve cars performance. Some are even using it to create new and more personalized services for drivers.
The Showdown: Mobile Devices vs. Connected Vehicles
Mobile devices and mobile applications are the connected car’s biggest competitor. Why you ask? It provides information and insights that are good enough for other industries who are using the data – such as insurance companies. These companies are using the data from the phone to perform complex activities that is relatively easy to do with data from the car (e.g. crash detection).
The insurance industry has been leading this new driving data journey for many years. Starting with capturing data from OBD-II devices, then sourcing it from smartphones, the industry increasingly sees the addition of connected vehicle data as the future of insurance telematics.
While it will be years before every car on the road is fully connected, the data collected from these hundreds of sensors in the car will be value-adding, not value-replacing for insurance use cases. The information insurers are already gathering from mobile devices should be enough for the time being, but more data variety means more accurate pricing for insurance customers.
Making Data a Win, Win for Everyone
The next generation of telematics-based data and insights that OEMs have sourced from connected cars has, up to this point, been invaluable to the insurance industry. Here at Arity we have developed a unique, insurance-grade Driving Score that jointly analyze drivers’ physical on-the-road mobile phone usage and corresponding claims data. This combination generates credible insight on how distracted driving increases risk of accidents on the road. Insurers can utilize these new insights to motivate and reward customers for more focused driving habits, making the roads both safer and smarter for everyone. Connected vehicle data is much richer and of a higher quality than the mobile phone data, which will make the Driving Score even more predictive of a driver’s risk. As a result, we enable carriers to provide hyper-accurate quotes to the customer, which reduces the overall risk of the offer, while also avoiding adverse selections over the long term.
While there are numerous short and long-term opportunities, if connected data is going to make an impact in the insurance market, there are several challenges that need to be overcome before we can begin to realize the promising potential of the future, including:
- Who’s Got the Data? – Getting the consumer buy-in and share their data is critical to success. Some OEMs get this opt-in as part of a connected services package, others make it part of their insurance program.
- What’s In This for Me? – To persuade consumers to share their driving data, OEMs and Insurers must communicate a clear value proposition that consumers believe is a fair exchange of value. Most importantly, the data should never be used against the consumer
Help Us, Help You!
In the end, establishing and growing effective partnerships on both data delivery and business models is a critical component of success for both sides. We all know that developing one-off solutions for a single program that requires multiple solutions partners doesn’t scale. At Arity, our mission is to offer our unique platform to enable the creation and launch of exciting new solutions and products that will appeal across the entire customer lifecycle from almost any industry, so that all of our partners can build an effective solution for their business