Collecting real-time data on a driver and using it to gain insight into an individual’s driving behaviour is nothing new; telematics are a decade-old device, which have become commonplace within the industry. In fact, the number of drivers with telematics in their cars is on the up, estimated to increase worldwide from 1.85 million in 2010 to 89 million this year – an annual compound growth rate of 90% (Accenture). A tried and tested technology, that has given rise to a new idea within insurance: cloud technology.

Cloud computing is the process of using a network of remote servers hosted on the Internet to store, manage and process data. Within motor insurance, in-built vehicle devices could be utilised to automatically transmit real-time data on driver behaviour, road conditions and accident liability to a remote cloud.

The opportunity cloud computing presents is currently much contested within the insurance industry, as players are increasingly recognising both the potential benefits and risks that this technology could bring.

While the application of cloud technology within insurance is not yet fully established, the market for this can be expected to grow exponentially over the coming years. According to Forbes, spending on public cloud infrastructure is forecast to reach $173 billion by 2026 – certainly not an insignificant figure.

Though the possible benefits are wide-reaching, an area of significant potential for the application of cloud technology in insurance is in the motor space; specifically in its opportunity to improve insurance offerings, corroborate claims and even prevent accidents from happening in the first place.

Application in motor insurance

Real-time data collection

Analysing customer data is a long-recognised insurance practice. Increasingly, technology is allowing us to, with permission, collect data from a variety of sources and use this information to better understand our customers.

Cloud technology is no different, as it would enable insurers to create direct connections with customers, allowing them to automatically receive real-time data on a driver that could be used to more accurately evaluate risk. As a result, this offers up the opportunity to better tailor products and services to their specific needs. Effectively, the use of this technology is an exchange of value; insurers are able to improve their underwriting capabilities and customers receive better value, in the form of better services and lower rates.

Corroborating claims

Cloud computing’s application to the claims process is significant, in the technology’s ability to provide reliable evidence, which could be used to validate claims. Instead of relying on vague testimonials collected after an accident, insurers could utilise a constant flow of data to better understand what happened in the event of an incident – without the need for effort or intervention on behalf of the customer.

One example of the way in which this might work is through in-vehicle devices that could be connected to the cloud. Telemetry devices and dashboard cameras monitor all aspects of your driving, such as braking habits, speed and location, as well as creating a continuous recording of the journey, which could then be utilised to provide video evidence in the case of an accident.

This evidence would be automatically transmitted and stored on the cloud, making the claims process not only more reliable through tangible video evidence, but also less stressful for the customer. As such, cloud technology could improve both the reliability and efficiency of the claims process and customer experience.

Accident prevention

It’s possible that cloud technology could even prevent accidents from happening in the first place. Imagine driving in the winter and skidding on a patch of black ice you didn’t see. You lose control of your car and, as you do, the cloud-connected technology in your car detects this, along with your location and shares this data to the cloud. The next car to come down the same road, which utilises cloud-connected technology, will receive a warning as it approaches the ice and be able to prepare and react accordingly.

Car loses control after sliding on black ice.

Cloud nine? Barriers to the adoption of cloud technology

Despite this, there are a number of obstacles to the widespread adoption of cloud technology. Specifically, data laws currently in place and tightening regulations are raising concerns around data privacy and protection. The introduction of stricter regulations such as the General Data Protection Regulation (GDPR) could cause complications to the way in which insurers are able to utilise cloud computing.

However, on the other hand, there is an argument that suggests that the use of the cloud could improve data security. Time after time, criminals are proving that on-premises data infrastructures employed by many businesses are difficult to secure. By removing the physical risk to data through expertly managed cloud infrastructure, businesses could greatly improve the safety of their data.

In the face of these advances to cloud technology, the importance of cyber security is becoming increasingly prevalent. Individuals and businesses alike are nervous about the thought of their data being held remotely, which could be subject to a cyber-attack. It’s important that businesses have the correct measures in place, to protect themselves from cyber criminals.

Furthermore, regulatory compliance remains important when considering technology which could prove to be disruptive to traditional insurance models and systems.

Moving on up: the future of cloud technology

From GPS trackers to dashboard cameras, many devices which could be paired with cloud technology to provide significant benefits are already widely available on the market. That these are useful devices cannot be denied; however, teamed with cloud capabilities, the collection and transmitting of real-time intelligence could prove even more valuable to both insurers and customers.

Improvements to risk management, underwriting capabilities and the resulting potential of being able to tailor products and services to customers’ individual needs is one of the key possible advantages of utilising cloud computing within motor insurance. The improvements it could make to customer experience, the claims process and cutting down on fraud are also significant.

While this potential may not yet be fully realised in the motor insurance space, the advancement of this technology marks an exciting opportunity. It’s important that brokers and insurers work together to best manage the risks and rewards that cloud computing could bring.

Dashcam recording footage of a road from within a vehicle.

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Interested in finding out more information about the changes to car technology, then check out another of our blog posts for more information on- car safety: Has it improved?

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