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Insurers are certain that in 10 years time, motorists will face inflated insurance premiums or even be forced off the road unless they allow their driving to be monitored at all times with a tracking device.
A number of insurers are planning to launch hi-tech products this year designed to monitor driving data such as the number of journeys made, the time of day the car is in used and any additional behaviour such as speeding or sudden braking.
Speakers at an insurance industry conference last week said that the new technology, known as “telematics” would become “opt-out rather than opt-in” for motorists in the future.
Tom Ellis of Gocompare, the insurance comparison website, who spoke at the British Insurance Brokers’ Association (Biba) seminar, said: “In 10 years’ time there will still be customers who prefer not to have a telematics device installed, [but] it will be an opt-out situation, rather than an opt-in.
“There will be reasons for people opting out – perhaps because they are bad drivers, or unhappy with the privacy element, or have an old car. But they will have to accept a higher premium to insure their car.”
At present, the cost of a professionally installed black box is £130 on average to insurers so it is mainly targeted at young people, who normally pay higher premiums, as it is presumed that they are more likely to have an accident. Insurers can then market lower costs to young people who go on to prove with the use of a black box, that they are in fact safe drivers.
This year, insurers have begun offering cheaper “self-install” devices and smartphone apps which are cheaper to develop in a bid to make ‘black box’ technology more accessible to the wider market. An app, for example, costs an insurer around £20 per download if the distribution is high, meaning older, lower-risk drivers can now be targeted.
The new app technology will soon be fitted in new cars as standard, and under EU regulations, all new cars will need black box-style technology known as eCall from October 2015, to help emergency services find crashed vehicles.
Sales of ‘black box’ insurance are continuing to advance at a fast pace, with a 60 per cent rise since 2012, according to Biba, and according to research by Boston Consulting, insurers expect telematics usage to rise from less than 1 per cent to 10 per cent in 3 years and 15 per cent in 5 years time.
Ofir Eyal of Boston Consulting Group said: “We are aware of insurers considering whether they should only take on new customers with telematics.
“We can see a situation where insurers will only be interested in certain types of customers, such as those who are willing to take a telematics policy.”
Eyal predicts that approximately 50 per cent of cars will be equipped with some form of telematics technology by 2020, which has prompted serious concerns about drivers rights to privacy.
Emma Carr of Big Brother Watch said: “Forcing drivers to have a telematics device installed in their car, which is capable of recording and transmitting exactly where and when they are driving, is totally unacceptable.
“There is a clear risk that once the telematics device is installed drivers will lose total control over who has access to their data and how they will use it.”
Proponents of the technology argue that it will make insurance cheaper for safer drivers by significantly reducing premiums. Black box insurance can already save those aged between 17 and 19 more than £400, according to Moneysupermarket.com, whilst over-25s can save an average of £90.