“There’s an image of a street in America from about 1898 and everyone is in horse-drawn carriages,” says Penny Searles, the chief executive of Smartdriverclub. “The same photograph was taken just 10 years later in 1908, and everyone had the new Ford Model T car instead. The insurers who had figured out how to insure cars ahead of that change led the market for the following 60 or 70 years.”
It was this lesson Searles had in mind when she started the Portsmouth-based business three years ago. Her aim is to build a company accustomed to insuring vehicles with sophisticated reporting functions and inbuilt tracking, which would put it in a strong position when driverless cars become widely available.
Currently it offers telematics insurance, a form of insurance where a policy is based on a driver’s behaviour. Such driver behaviour – how fast they go, the routes they take, what time they drive – is measured by an internet-connected device, usually plugged in underneath their glove compartment. No matter their age or profession, drivers stand to get discounts based on this data.
Several motor insurers now offer this service including large firms such as the AA and Tesco Bank, and newer, smaller brands like Marmalade, and Coverbox. The policies are often aimed at young people who are put off driving by the hefty insurance premiums they would normally have to pay. And there’s some evidence to suggest the use of telematics is reducing young-driver casualty rates because of the incentive to drive carefully. It’s still an emerging trend, though, with fewer than 1m policies being taken out in the UK last year.
Where Smartdriverclub is tying to differentiate itself, Searle says, is in all the additional things that telematics could do, but currently isn’t.
At present, it is the only telematics insurance provider that can tell users when their MOT is due and when the car battery is low. It also comes with an automated voice that asks if you need help after a crash; if the answer is “yes”, or no reply is given, that notifies the insurer’s 24-hour team and the emergency services. It also offers live tracking of where your car is which “could help if your daughter is out driving late at night, and you’re worried, wanting to see where she is,” Searles says.
The business has picked up two tech and innovation awards last year from Insurance Times, and in 2017 Searles was named a rising star of women in the car industry.
The introduction of fully autonomous cars is expected to lead to an overhaul in car insurance. Issues such as speeding might not affect driverless cars, but it’s this type of data that will be needed to settle insurance disputes - speeds, locations and the vehicle decision-making processes will all inform how each claim is resolved.
“Motor insurance is still often priced and sold in the same way as 15 years ago: it depends on where you live, how old you are, your job, how old your car is, and so on. It’s been that way for ages,” Searles explains.
“We’ve got an advantage in that we are fast, entrepreneurial and small. We can make decisions and implement new things quickly,” says Searles. “But our budgets are much tighter than for larger insurers,” she adds, as selling telematics insurance also comes with the overhead of sending a smart device to customers.
Her company has grown to 50 staff; she started it after leaving the first business she founded 10 years ago called Wunelli, which sold telematics data to other companies. Her senior team came with her to Smartdriverclub and her two sisters also help out.
But not everybody is happy with the capabilities of this technology. “There will be customers who don’t want it,” says Andrew Stevens, a consultant at customer experience consultancy Quadient. “They could be people who want to drive at 90 miles an hour on the motorway and would prefer not to have that tracked.
“Some customers will be very wary of data technology generally – and that’s certainly a valid concern when you read about data breaches in the media all the time. It comes down to making sure the tech is good and being used in good ways.”
Quadient’s research found that “56% of customers would like their insurer to use technology to provide a more accurate premium, while 85% would like their insurer to give them insight into how they can lower their premium by suggesting changes in behaviour”, says Stevens. “It’s not about having monitors absolutely everywhere just to check the car speed.”
Searles is convinced that people can be persuaded, pointing out that we are already comfortable with smartphones that keep our location data. “We are prepared to accept that some information is being taken as long as we know about it and as long as we get something in return,” she says. “And if you are driving a little too fast one day, it’s not like we label you a bad driver – life happens sometimes.”
