Talk of the stagnation of telematics does not reflect reality, says Mufassira Fathima. Insurers are pushing ahead with the technology to deliver fairer premiums and reduce claims costs
The industry for consumer telematics has scaled significant heights in the last few years. From catering to the need for customary navigation services to the deployment of advanced communication systems in vehicles, it has traversed several developments.
As a part of 24-7 connectivity solution, the consumer telematic system within an automobile provides ample security and safety, contributing to a superior driving experience. The surge in popularity of electric and autonomous vehicles has also propelled the growth of the consumer telematics industry.
The consumer telematics market has scaled great heights in recent years. The rise in the popularity of multiple connectivity solutions, along with the enhanced need for vehicle diagnostics and maintenance have augmented the progress of telematics in the automobile sector.
According to Allied Market Research, the global consumer telematics market is touted to earn a whopping $26.18 billion by 2020 as the deployment of data analysis and convergence with cloud technologies is expected to open new avenues for the market in the near future.
Insurance industry calls for advanced vehicle telematics
The insurance industry is one of the most prominent end-users of vehicle telematics. The solution of insurance telematics is the highest revenue-generating one in the global consumer telematics market. The segment alone contributed to nearly 27% of the entire market revenue. The growth of this segment is directly triggered by the exponential rise of the insurance sector.
To cut down the costs on claims, insurers have ensured that automobiles are installed with the latest communication and navigation services. These systems track driver information and keep a record of their driving habits for consideration by the company, so policyholders can be fairly charged for premiums based on their driving.
The fair charging of premiums based on driving habits has ushered in a well-thought out concept of usage-based insurance. This is how the employability of telematics in insured automobiles would aid in better insurance policy-devising, cutting down on claims cost, and reaping major rewards for both the insured and insurer. This is one reason why insurance companies are either partnering with, or buying, telematics companies to enable better fleet management and to monitor driving habits of their policyholders.
Vodafone recently won a telematics contract with vehicle insurers that would supply a range of data collection methods for telematic units in vehicles. The simple GPS and communication solutions are swiftly being replaced by sophisticated OEM, infotainment systems, and satellite-powered navigation methods that are expected to give a real boost to the vehicle telematics industry.
Competitive analysis yields a promising scenario
The competitive scenario of the consumer telematics appears very vibrant. A detailed analysis of the competitive landscape by Allied Market Research reveals that the industry has a robust presence in the North American region, owing to the boom in the automobile industry in the region.
However, it is also essential to note that the Asia-Pacific and LAMEA (Latin America, Middle East and Africa) countries hold exciting prospects for the consumer telematics market. This is mainly due to the supportive government regulations and the rise of the automobile market. Competitors and major industry players are on the lookout to tap the immense potential of the market and capture a larger customer base.
For instance, Ford Motor Co. and Toyota Motor Corp. have recently formed an alliance with four other medium-sized automobile makers — PSA Group, Mazda Motor Corp., Fuji Heavy Industries, and Suzuki Motor Corp. The companies have formed the non-profit group to ensure there is an even distribution of competitive share in the telematics market, and prevent the monopolizing of the market by big brands such as Apple and Google.
The group aims to promote auto-industry standards for in-vehicle applications and systems, so drivers can connect their smartphones to their vehicles for better connectivity. With moves such as these, the consumer telematics industry has begun to witness several market dynamics that prove a diverse competitive landscape in the industry.
The consumer telematics solutions are set to take on a new meaning in the automotive industry, as several automakers are sure to catch onto the trend and install systems in cars to ensure seamless connectivity and advanced technology access.
Not only is this technology an advanced step in the right direction, but it also has the potential to radically change the way vehicles are driven on the road. This system also sees major potential for application in the future of driverless or automated cars.
The consumer telematics systems, when functioning in confluence with other progressive technologies could significantly improve driver performance, reduce accident risks, and add to the entire driving experience.
Mufassira is a content writer at Allied Analytics