The challenge of device fragmentation in the connected car, explored by Graham Jarvis [Ins.Jarvis.05.12.2016]

According to Guillaume Lehallier, product design and ecosystem manager at insurance company AXA, the key challenge facing semi-autonomous and autonomous cars falls down the insurance liability question. When an accident occurs in these driving modes, who is liable?

“We need data to understand who’s responsible in the event of an accident,” he replies. The second challenge in his opinion is related to the first one because with the development of autonomous driving there needs to be an evolution of the regulatory framework to answer the liability question. “In a number of countries most car manufacturers’ experiments must be done today with the driver in the control of a vehicle that is compliant with most of the existing regulatory frameworks,” he explains before adding a third challenge to his list. Referring to it as an ‘obstacle’ he says there need to be more visibility regarding the development of the technology in order to understand how it will evolve in order to share stakeholder knowledge and information about their work on the technology.

“For connected cars there are a few obstacles, and the regulatory framework is not the main one because the connected car market is highly dynamic,” he comments. In essence he thinks there is a need to be able to address this dynamism “by creating much flexibility and agility with the right partnerships and the right capabilities to be able to offer our insurance products and services”.

Subsequently AXA has identified some of the key players: the OEMS; the technology companies such as Vodafone, Octo Telematics and Samsung. Yet Lehallier is also noticing the emergence of new kinds of players, such as data brokers. With this trend in mind he believes that his company needs to be able to react to address the market’s needs. He then comments: “The critical point for insurers is to be reactive and agile enough to ensure that we deal with the right partners, to be able to offer our services wherever we can.”

Conquering fragmentation

So how can insurers conquer the fragmented device landscape? Jonathan Hewitt, chief marketing officer at Octo Telematics also believes it’s about having the right partners: “Insurers can conquer the fragmented device landscape by working with connected car partners that have an integrated Internet of Things (IoT) platform.” He adds that their solutions need to work across the device spectrum – from smartphone apps and aftermarket devices to connected cars.

“At Octo, for instance, we do exactly this for our 60+ insurance partners to deliver end-to-end benefits across the insurance value chain, from pricing support, crash alerts and reconstruction to web portals for customer engagement,” claims Hewitt.

AXA’s response to this challenge has been as follows, according to Lehallier: “We have established our own telematics service provider to offer products and applications such as usage-based insurance (UBI), connected claims services, driving scores, data enrichment and mobile apps like AXA Drive.”

The benefit of this approach is that it gives AXA the ability and capacity to access the data using many different types of connectors such as APIs, SDKs and devices. His company, therefore, has the capacity to interact with all of the technologies that are in use on the market. The different types of connectors, including the APIs, enable the insurer to overcome the market’s fragmentation. This approach allows the insurance company to work directly with car manufacturers and technology firms, Samsung being one of them. Axa can interact directly with the devices it provides its customers too.

Device data analysis

Hewitt adds that insurance companies can understand how to consolidate mobile device data from both iOS and Android operating systems to create a standardised approach to smartphone data analysis by looking for partners that are already equipped with some “powerful technology to analyse data from a range of different sources. For example, Octo Telematics provides this consolidation service for insurers, gathering contextual vehicle, driver, location and crash data and applying proprietary algorithms to transform it into actionable intelligence, informing solutions that benefit both auto insurance companies and policyholders”.

Yet Lahallier doesn’t believe that consolidating mobile device data from different device platforms is the key objective of the market right now. “We are already able to capture data from iOS and from Android in a way that we can treat it neutrally; no matter where it comes from, and right now market studies reveal that one of the main sources are the black boxes and OBD devices.” He then rightly points out that going forward smartphones will be not be the only connectivity option.

“New players like data brokers are dealing directly with the OEMs and selling the data to the service providers,” Lahallier says before adding, “if we would access the data through an intermediary we would have to negotiate to get the data we want and, with regards to this we need to observe what’s happening with the regulations and what the European Commission says [this practice].” Yet AXA doesn’t don’t sell its clients’ data because as an insurance firm it’s not a data broker.

Data coherence

With regards to the OEM data connection and the ways in which insurers can derive coherence from vehicle data by transitioning from summary data sets to a new format of per second data transmissions for more accurate insights to customer behaviour, Hewitt comments:“Experts predict that by 2020, connected cars will collect more than 11 petabytes of data a year, including from embedded telematics devices. One of the first industries to feel the immediate impact of this Algorithm Economy is car insurance. The change, of course, will not come from the numbers themselves but from making sense of the data. The data we once allowed to go uncaptured now can be feed into algorithms, which provide us with insights into driver behaviour, and they in turn allow drivers, OEMs and insurers to take action.”

Lehallier responds by suggesting that the answer to deriving coherence from vehicle data is about understanding and maybe influencing what the kind of data insurers and the other ecosystem players want to make accessible. “The European Commission will push for a decision about this but, in the meantime, the data accessibility and the protocols for it are not currently standardised,” he says.

In his view it will happen when, for example, the car manufacturers engage in partnerships with each other and with other players within the connected car ecosystem. He nevertheless adds: “If Apple CarPlay becomes one or two of the operating systems, then this will be a standardisation factor in the same way that it happened on smartphones. This won’t happen soon but I think it will occur in the medium-term.”

Embracing live data

With regards to transitioning from summary data sets to a new format of per second data transmissions for more accurate insights to customer behaviour, he says AXA needs access to live data “since our usage-based insurance offers provide improvement tips to the drivers at the end of each trip, and it is important as well for crash recorder systems to get access to live data because it gives us the ability to react quickly in case of an accident”.

Live data can also be used to offers customers information the risks they face during a trip. It can also offer a means for providing prevention services. These don’t always operating in real-time.  “The critical point for beyond real time is really to access raw data rather than aggregated or transformed data,” he says.

Strategic imperatives

Lehallier that insurers’ strategic imperatives for the connected car in 2017 will be three-fold. Firstly there is the need to identify the right value proposition. “Connected cars are an opportunity for us to provide better services but nobody has found the perfect value proposition because we still need to better understand and explore fully the new opportunities generated by this new connected world.” While the market is new, he thinks it can bring much value with it in terms of the ability to assess risks and to improve safety.

“The second strategic imperative is to be able to develop partnerships within the connected car ecosystem because this market is by essence ecosystemic – a large variety of stakeholders must interconnect themselves and work together to provide increasingly complex services and offers,” he says before adding that insurers need to make themselves “pluggable with other stakeholders of connected mobility”.

From AXA’s perspective this is about providing the right capacity with the right connectivity. He then concludes with his third strategic imperative, which is to ensure that insurers will always have access to the right data to enable their work and to protect their customers.

Connected Car Insurance Europe 2017

19 Apr 2017 - 20 Apr 2017, LONDON, UK

This is the largest and most comprehensive forum in Europe dedicated to connected car insurance. With over 400 attendees from across 25+ countries globally and 50+ executives speakers, this event will address the technological challenges and new business models to impact the motor insurance industry as it converges with the connected car.