DigiCore Holdings has signed a deal with the Discovery Group to exclusively provide it with telematics products for its short-term insurance entity Discovery Insure.
Discovery launched the insurance offering last month. In a statement issued at the time, the company said its offering would use “the science of measuring driving intelligence to reward good drivers with fuel rewards”.
CE Adrian Gore said: “We are very excited to enter the short-term insurance market. We have studied this market for a number of years and are optimistic that we can bring structural change to this market.”
Discovery now operates in the short-term, health and life insurance, long-term savings and investments, wellness and credit card markets.
It will use CtrackRegistered devices from DigiCore, branded as DQ-track by Discovery, with the telematics services also provided by Ctrack to monitor driver behaviour, which will be used to aid the company to work out premiums.
In early 2010, Discovery started a process to identify a technology and business partner, and for its short-term offering. The deal gives DigiCore access to a potential market of about a million vehicles in SA owned by people dealing with Discovery.
Tech solution
Ctrack executive director of strategic projects Deon du Rand says the deal is exclusive to SA and will see Ctrack develop the technology for tracking units, which will be installed in cars owned by Discovery clients if they opt in.
Du Rand says there is a global move to shift away from the old way of working out risk based on age, gender and physical address. He explains that internationally companies can no longer base premiums on variables that clients can not change, such as age and gender.
The shift puts insurance companies in a difficult position and they must diversify themselves, says Du Rand. “Telematics is the answer.”
Du Rand says the system takes aspects such as driving behaviour, location and time of travel into account, which is then used when Discovery works out risks and premiums. He says 80% to 85% of risk is driving behaviour, while the balance is theft-related.
Change driver
Du Rand says the shift to using telematics for short-term insurance is a step change for the sector. He says insurance companies will use the information over the long-term to work out the best actuarial models for their clients.
Consumers can log onto a Web site and gain access to how they are driving, which will aid driver behaviour, says Du Rand.
In addition, he says, premiums can be adjusted monthly, based on the latest available data. The system can also be used to track vehicles if they are stolen, he adds.
Drivers get long-term benefits for improving driving behaviour, such as cheaper petrol through Discovery's network of partnerships, notes Du Rand.
The use of telematics in insurance will be a growth driver for the industry, Du Rand points out. He says there will be a race between companies in the sector to see which firm can provide the best data.
DigiCore says the exact financial impact is not yet known and the board does not want to speculate.
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