Drivers refusing to deploy tracking units could face higher insurance premiums

Drivers who refuse to include telematics tracking devices in their vehicles could face higher insurance rates, predicts insurance execs.

Both commercial and consumer vehicles are including more telematics equipment as part of an effort to improve fleet efficiency and provide services to consumers. But the ability to track vehicles wherever they go is raising privacy concerns as well as employee opposition.

The biggest impact of increased use of tracking devices in consumer vehicles is likely to be in the provision of auto insurance.

"In 10 years' time there will still be customers who prefer not to have a telematics device installed, [but] it will be an opt-out situation, rather than an opt-in. There will be reasons for people opting out--perhaps because they are bad drivers, or unhappy with the privacy element, or have an old car. But they will have to accept a higher premium to insure their car," observes Tom Ellis with insurance website Gocompare, who was quoted by The Telegraph as saying at a recent British Insurance Brokers' Association seminar.

While the price of professionally installing tracking units in vehicles is high, insurers are increasingly providing self-install devices and smartphone apps that are much cheaper, the newspaper notes.

Boston Consulting Group's Ofir Eyal predicts that half of cars will be equipped with telematics technology by 2020.

Juniper Research forecasts that global revenues for telematics systems will reach $20 billion by 2018, spurred by what the market research firm calls "soft revenues"--such as car servicing, big data enabled by telematics and enhanced customer services that will enable manufacturers to generate revenues throughout the lifetime of the vehicle.

At the same time, soft revenues will constitute a "major untapped revenue source" for consumer vehicles, judges Juniper.

Split billing for telematics systems will be an important source of soft revenue. "The ability to split the telematics bill, pioneered by major operators and systems integrators, will have a positive impact on the telematics market. Granular billing for infotainment and other services will lead to new business models," says Juniper analyst and report author Anthony Cox.

In addition, launch of services like Apple's in-vehicle CarPlay will accelerate app integration into the vehicle through smartphone-tethering and direct integration into the head unit.

Cox expects in-vehicle apps to become widespread in the next five years, with most apps being available free of charge.

For more:
- check out The Telegraph article
- see Juniper's release

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