Telematics is a word that reportedly first appeared in or around 1978 in some French technical literature. According to the Oxford English dictionary, the definition is “the branch of information technology which deals with the long-distance transmission of computerized information”.
In 1978, the concept of large amounts of remotely generated data being integrated and used for commercial or public purposes was largely futuristic, given limitations of the computers of the day. Now we live in a time when the typical teenager’s iPhone is said to have more computing power than NASA had when it put a man on the moon. The unlimited collection, integration and use of remotely obtained data is no great challenge. The universal popularity of GPS navigation devices is a testament to this development.
Beyond navigational benefits, telematics is rapidly but in a largely unheralded way, completely changing the way we operate motor vehicles. Businesses with fleets of commercial vehicles were among the first to recognize the efficiencies that could be obtained via telematics. The information vital to efficient fleet management includes tracking for location, driver behaviour management, fuel management, vehicle diagnostics, and safety issues. Managers can now obtain this information in real time, and are given the opportunity to create efficiency that was impossible even ten years ago.
The first Telematics Standard was developed by the Association of Equipment Management Professionals (AEMP). By 2008, through the AEMP, construction equipment manufacturers such as Caterpillar, Komatsu, Volvo and John Deere were cooperating so that mixed fleet operators could co-ordinate their data. On 1 October 2010, the “AEMP Telematics Data Standard V1.1” was declared live.
What does all this mean to the average motorist? Simply, whatever device is being installed in some huge fleet vehicle can equally be installed in any other motor vehicle. All of the “where is it?” and “what is it doing?” information can be cheaply and easily collected and analyzed. With standard data protocols in place, variations between makes and models of motor vehicles are not a concern for telematics.
So here we go. Insurance companies no longer need to make the traditional educated guesses based on statistics and driver history, about who is and who is not a bad driver. The vehicle will be reporting constantly to the insurer about the driver’s behaviour. In a 2005 beta test by the European insurer Norwich Union, the use of telematics with a sample group of young drivers reportedly showed an accident rate 20% lower than the average for that demographic.
Telematics based insurance is now being offered by a number of major American automobile insurers. Fancy names for this type of coverage abound, including “Snapshot”, “DriveWise”, “TrueLane” etc. They all mean the same thing. The vehicle is being monitored. Constantly. The benefit to those who agree to have a telematics device in their vehicle is said to be up to about a 50% saving on premiums a year.
Expect telematics auto insurance to be standard in North America, very soon.