Renault and Scope tech hint at auto-insurance usurpation

Renault has teamed up with telematics firm Scope Technologies and European insurance giant Groupama to offer a usage-based insurance (UBI) service for drivers of Renault’s electric car, Zoe. This is an important move by the French auto industry in a shifting dynamic that will see car makers eventually squeeze the insurance providers to breaking point – one that will potentially lead to manufacturers bundling insurance into sales of new cars in the not so distant future.

Scope Technologies is providing software and data analytics for Renault’s R-Link multimedia system, to monitor driving behaviors with the ultimate aim of offering drivers cheaper insurance policies – apparently leading to policy savings of up to 36%.

Granted, this may only be one instance of a UBI roll-out in one country, but it is a deal struck between one of the largest insurance firms in Europe, with one of the continent’s largest manufacturers – one that threatens to cut the insurers out in both direct-to-consumer auto sales, as well as business and fleet sales.

It represents the start of a drive towards the eventual end-goal of a Vehicle-as-a-Service (VaaS) model in the future, where the likes of Renault can sell a managed fleet system to ride-sharing services such as Lyft – from which the manufacturer can create a recurring source of service revenue, and potentially recycle older vehicles in markets with lower ARPUs.

GM and Ford are two giants making VaaS moves, in both the traditional manufacturing business and also by investing large sums of cash in self-driving technology vendors and ride-sharing services, in the race to autonomous technologies.

Self-driving technologies and advanced driver assistance systems (ADAS) should result in less crashes on the roads, which should ideally equate to cheaper insurance – but the auto insurance players aren’t about to lie down and let that happen.

Insurance firms were therefore setting themselves up as huge data brokers, or automotive data marketplaces – collecting hoards of data from telematics boxes installed in vehicles, using these driver insights to offset losses caused by fewer vehicles on the roads falls, as well as the falling frequency of large insurance claims thanks to major safety advancements.

But in perhaps 25 years’ time, the roads will be rife with vehicles that have telematics system functionality pre-integrated into the vehicle hardware – meaning that the blackbox insurance market will suffer and eventually fade out of favor in the major markets.

It seems likely that the insurers are going to be left out in the lurch, – cut off by the automakers from a lucrative source of data. For the insurers, this data could then have been monetized through selling access to companies and cities interested in the results. With this unprecedented access to a vast quantity of driver data, cynics argue that insurers will almost certainly use it to their advantage – manipulating this valuable data to reduce the number of claims payouts.

This pre-installation of telematics systems will mean car makers would be able to begin bundling insurance with the cost of their cars and the associated finance – cutting off the traditional insurance providers, as well as those transitioning to become data brokers.

Tesla executives called out auto insurers last month, claiming that the enhanced safety of Tesla’s autopilot-equipped vehicles should result in lower policy costs for its drivers. Ohio-based insurance group Root gladly rose to the opportunity, offering drivers savings on the condition that they take a test drive where their driving will be monitored and scrutinized by a mobile app – with the app having the final say if the test driver meets the appropriate criteria.

However, Tesla CEO Elon Musk has still suggested that his company will eventually end up bundling its own insurance policies into vehicles sales. “If we find that the insurance providers are not matching the insurance proportionate to the risk of the car then if we need to we will in-source it. But I think we’ll find that insurance providers do adjust the insurance cost proportionate to the risk of a Tesla,” Musk said in the company’s earnings call back in February.

In a similar move, UK-based global insurance firm Liberty Mutual announced this week that it is offering discounted policies for drivers of Volvo vehicles with active or passive advanced safety features installed. Liberty says the move aims to encourage the adoption of advanced and autonomous safety features among drivers.

Meanwhile, Volvo has pronounced that its autonomous vehicles will be completely “death-proof” by 2020. It’s a bold target indeed, but CEO of Volvo Cars North America, Lex Kerssemakers, claims there is method behind the madness, saying, “if you meet Swedish engineers, they’re pretty genuine. They don’t say things when they don’t believe in it.”

Cyril Zeller, VP at Scope Technologies, commented on the collaboration, “this alliance brings Amaline customers cheaper, more transparent car insurance and provides French drivers with the first ever integrated UBI system. This technology is cutting edge but is not limited to just in-built connected car systems so we expect UBI solutions to be rolled out across Europe in the next year.”

Scope believes that integrated UBI systems will roll out across the rest of Europe by next year.