• Phone
  • Contact us
  • Locations
  • Search
  • Menu


  • Add this article to your LinkedIn page
  • Add this article to your Twitter feed
  • Email this article
View or print a PDF of this page

"Insurers will face challenges to realise the benefits of the data smart technology can provide. However the ECJ ruling means insurers cannot continue with business as usual."



Neil baxter and Markus Hochenbleicher, PA experts in mobile business and insurance

Finding a smarter way to assess drivers’ insurance risk

Following the recent European Court of Justice (ECJ) ruling preventing insurers from using gender to calculate insurance premiums, in-car smart technology, which collects data on how a car is actually being used, provides insurance companies with an alternative way of setting premiums.

While earlier attempts by insurers to introduce ‘pay as you go’ products have failed, developments in technology, the market and society mean the time is now right for smart technology to change the way insurers sell motor insurance to consumers.

Smart technology is a reality in modern cars

Since 2008, when Aviva withdrew its ‘pay as you drive’ product citing the slow uptake of in-car technology by automotive manufacturers, technology has progressed rapidly. Many modern cars are now equipped with sensors that can measure speed, acceleration and location, and the automotive manufacturing industry is looking to advance this further. At the Geneva Motor Show in 2011, Audi presented its vision for a connected car with access to Google Earth. At the same time, there is on-going research into using black box technology in cars to provide data on accidents.

Customers and insurers have a greater incentive to use smart technology

Following the ECJ ruling, the incentive for both insurers and customers to take advantage of smart technology is much greater. Insurers need to identify and use data other than information on gender to price risk. In the UK, Holland, South Africa, Australia and Japan, insurance companies are already building the capability to collect and use data from smart technologies to develop a new generation of ‘pay as you drive’ schemes. From a customer perspective, those who benefited from cheaper insurance prior to the ECJ ruling will now be very interested in a cost-effective smart proposition as a way of maintaining low premiums.

Consumers have grown used to sharing personal data

Customer aversion to the idea of being monitored was flagged by British Insurance Brokers Association (BIBA) as one of the reasons why early 'pay as you drive' schemes failed to gain critical mass. However, it is increasingly common for consumers to have their personal data held and used by a wide range of organisations. Insurers can encourage customers to share their details by:

  • allowing customers to choose what personal data can be used and how

  • communicating the advantages of allowing insurers to hold customer data, for example, premium reductions and access to  tailored insurance products.

Opportunities from smart technology

The ECJ ruling means insurers cannot continue with business as usual. However, smart technology offers them the opportunity both to deal with the immediate challenge of setting premiums without reference to gender and to stay ahead of the competition by creating innovative and differentiated products.

PA  acts as delivery partner  to many leading insurance sector organisations to enable them to respond to the multiple challenges of regulatory compliance, delivering growth, restructuring and cost reduction. Exploiting years of experience with firms such as Axa, Allianz, Aviva and Legal & General, we create teams of service and sector experts to help clients understand their challenges, define their strategic response and driving change to deliver lasting benefits.

To find out how PA Consulting Group can help your organisation understand how smart technology solutions can meet your business needs, please contact us now.

By using this website, you accept the use of cookies. For more information on how to manage cookies, please read our privacy policy.