17 Apr 2014 How the connected car will impact the insurance and market research industries
Last month, Apple launched its in-vehicle infotainment product CarPlay. With iOS integration officially coming to the car industry, the race to market for the best holistic connected car technology is well and truly underway. Google confirmed its Android in-car push by announcing the Open Automotive Alliance with the likes of Audi and Hyundai earlier this year. And new forecasts suggest that by 2018, the global connected car market could be worth up to $53bn.
Connected cars would have a range of benefits for consumers – in short, by connecting with other cars and external traffic management systems, accidents could be prevented and fuel efficiency could be reduced. This has been widely documented, but in this post, we’ll take a look at some of the advantages for the future of market research and for the insurance industries.
Significantly more accurate behaviour data for market research
One in five new cars already collect driver and driving data for car manufacturers, according to the Los Angeles Times. This data typically consists of information regarding the car’s engine performance or driver habits. By 2020, the type and quantity of information that car manufacturers will have access to thanks to connected cars could be as high as 11.1 petabytes of data, according to HIS Automotive. Constant and complete data collection would prove invaluable to manufacturers looking to tailor car safety, servicing options, loyalty programme benefits – and much more – to their customers.
This increase in the behavioural data available will open up new opportunities for market research. For the first time, we’ll be able to see what consumers actually did, meaning that we’ll no longer have to rely on claimed behaviour. And it’s unlikely to stop there. As the connected car becomes more mainstream, it’s inevitable a wealth of companion apps will emerge, providing further behavioural data. It is already possible to perform basic functions using a smartphone such as unlocking car doors, but the range of apps – and subsequent user behaviour data – will increase heavily as the connected car becomes more and more sophisticated. As we’ve previously discussed, the Internet of Things and the ever-connected consumer will continue to have a big impact on the future of market research.
The connected car will also impact on insurance prices
The connected car will also significantly increase the amount of data available to insurance companies for calculating drivers’ premiums. More than merely tracking metrics such as distance travelled and general driving patterns, in-car data measuring will be specific enough to allow companies to analyse and insure different parts of the car, rather than just the driver. The industry is already offering lower prices to consumers through either a pay-as-you-drive model or a pay-how-you-drive model using currently available data. Soon, insurance companies will be able to provide consumers with lower prices as manufacturers use connected cars and data to try to prevent accidents in the first place.
The process could be accelerated if the US government succeeds with plans to make vehicle-to-vehicle (V2V) technology a legal requirement in order to increase driving safety. The US Department of Transportation claims V2V communications could prevent up to 76% of all driving collisions, which would consequently reduce risk for insurers and drivers, lowering the premiums.
However, for this goal to be realised, significant developments in the technology are still required to prevent V2V technology from actually making driving more dangerous in the short term. Last year, hackers successfully unlocked a stranger’s car and started its engine using text messages sent from their smartphone.
The connected car will have significant implications for market researchers and insurance companies alike. If V2V technology and its trackable data proves to be sophisticated enough to allow Volvo to achieve its aim of ensuring no deaths in its new cars by 2020, these industries will have an unprecedented amount of data within easy reach.