Who is behind the wheel to drive the adoption of car telematics?

As the barriers to car telematics adoption begin to subside, the technology has the potential to change consumer perceptions, increase interactions, and reshape the motor insurance industry. Some markets, like Italy and the United Kingdom, are at the forefront of implementing user-based insurance.

With insurers tapping into digital ecosystems, it is expected that by 2020 nearly 100 million vehicles globally will be insured with car telematics policies. This is projected to grow to nearly 50 percent of the world’s vehicles by 2030. But where is the Dutch market in terms of telematics? What are the market barriers? And who is behind the wheel to drive adoption?

Usage-based insurance on the rise

Usage-based insurance (UBI) has already been on the agenda for many insurers worldwide for quite some time now. Some markets, like Italy, the United Kingdom and the United States, have experienced stronger rates of adoption compared to others, which has resulted in the emergence of different technologies and propositions. In the Netherlands, telematics has been slow to take off despite the clear benefits and potential to fundamentally shift the motor insurance model. If insurers can overcome these challenges, the doors to adoption are open.

Car telematics quote from a global multiline insurer - by Accenture

UBI provides insurers with the opportunity to tailor insurance premiums to consumers specific behavior and usage patterns. There are two alternatives to this technology: pay as you drive (PAYD) based on usage and pay how you drive (PHYD) based on behavior. We will focus on the latter.

To remain relevant as an everyday insurer, you will need to change your business model. Move from a product and process-driven model towards customer-centricity, supported by decisions based on data and analytics. Key enablers are advanced technologies and a more strategic management of information.” 

Opportunities for business transformation  

Insurance telematics can help address numerous business drivers for insurers, including a reduction in claims loss, modification of customer mix and pricing, anti-fraud detection, increase in product penetration, increase in customer retention and a reduction in the cost of acquisition.

Car telematics quote from a global multiline insurer - by AccentureIn order to do so, a sufficient quantity and quality of data is required to gain valuable insights and improve business decision-making.

Insurance executives agree on increased risks due to automation, like fake data, data manipulation and bias - Survey statistic - by Accenture

Lessons from other markets

Key insights can be taken from leading markets such as Italy, the United States and the United Kingdom, to drive growth in the Netherlands. While some of the factors that have driven the adoption are market specific, they serve as a useful benchmark for the extent of possible change.


There is a high cost associated with motor insurance premiums, fraudulent claims are common, and theft has been an issue. The government had an influential role by placing pressure on insurers to introduce telematics policies. These conditions have driven the adoption rate as the country is now a leading example of car telematics worldwide with a telematics car insurance penetration rate of over 19 percent and over 5.3 million UBI policies.

United States

High motor insurance premiums for young drivers and a strong focus on pricing and upfront discounts. Eight out of ten top US insurers have telematics propositions in their portfolios, resulting in over 7 million UBI policies in the country.

United Kingdom

Portrays a very similar approach to the United States. Telematics has clearly been targeted towards younger high-risk drivers who would like to take control of their premiums and receive feedback on their driving.

The Netherlands

The incentive for Dutch drivers to adopt car telematics is still unclear. As it stands, there are currently three telematics providers on the market, ANWB, Voorop and Fairverzekering, who, combined, represent less than 1 percent of the total of 6 million automotive insurance policies (in 2016).

Car telematics around the globe - by Accenture

Barriers for Dutch insurers

Insurers in the Netherlands are confronted with barriers that have slowed down the rate of adoption. These can be outlined in five key points.

  1. The Dutch automotive industry has a high degree of competition and relatively low-priced premiums. Despite this, the average premium for basic WA insurance for young drivers aged between 18 and 24 has increased by 53 percent over the last two years. This is faster than any other age category.
  2. Telematics is a costly investment in the short term and takes time to grow a sufficient portfolio of data. This has led to some insurers being hesitant of negatively impacting current processes and business functions.
  3. The frequency and severity of auto claims in the Netherlands is at an all-time high. Insurers are making 22 cents loss on every policy sold. On top of this, damage claims are expected to rise by €250 million in the upcoming years. Smart cars, like Teslas, are equipped with a growing number of sensors and pricey components that make damages more expensive to repair.
  4. Innovative businesses require specific skills, experience and company structure that insurers typically lack.
  5. A strong level of privacy regulation in the Dutch market means that customers are more aware of what they share with whom for new services.

Clearing the hurdles for car telematics adoption - by Accenture

Overcoming the hurdles

Before being more widely adopted in the Dutch market, some of the following hurdles need to be cleared.

  • Possess a reliable and sufficient amount of data. Insurers should no longer suffer from a lack of data, but from a lack of data with the right quality.
  • Have a good risk model in place to tailor premiums accordingly.
  • Price telematics solutions competitively so that customers see an incentive for adoption.
  • Offer car telematics with additional value-added services, as they are indispensable. Think of break-down help or roadside assistance like the Allianz-Waze collaboration, loyalty or referral programs or discount vouchers.
  • Be fully transparent in terms of the collection and use of data through telematics propositions.
  • Attract skilled employees with diverse backgrounds as they are needed to build innovative capabilities.

Insurance consumers willing to share more information for benefits - Survey statistic - by Accenture

Five essential steps for telematics adoption

The customer is behind the wheel for adoption, not the insurer. As a result, you should focus your priorities on designing with the customer at heart.

  1. Understand the consumer in mind, aim to proactively solve their problems by tailoring products to their needs.
  2. Focus on the ecosystem, know when to lead, seek or obtain partnerships and collaborations.
  3. Invest in optimizing user experiences by offering a greater level of personalization and simplicity.
  4. Create fun and engaging propositions by incorporating aspects of gamification.
  5. Build a culture of continuous improvement, focus on innovation and customer-centricity.  

Consumers want more personalized advice - Survey statistic - by Accenture

In the short term, change is inevitable for car insurers. Those who make a move now and experiment will be better off given their experience with car telematics. Insurers that are less adept will initially be at a competitive disadvantage. Transformation does not happen overnight.

In the long term, telematics should be seen as a complete shift in the way insurance can be bought, consumed or serviced. At a later stage, car manufacturers may take over the role of after-market installed devices and propositions such as black boxes, OBDs, dongles and smartphones. All in all, this will require closer relationships between insurers and manufacturers.

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Embracing the future of car telematics

To date, the disruption telematics caused in other countries has not yet materialized in the Dutch market. With the suitable requirements in place, the door is open for companies that wish to be truly innovative and groundbreaking.

Car telematics quote from a global multiline insurer - by Accenture

Some insurers may build platforms themselves and create ecosystems with their business at center. Alternatively, you may find it cheaper and faster to leverage existing platforms as their means to enter new ecosystems. Key partnerships and collaborations will be essential to accommodate further growth. We see insurance organizations partnering with unlikely allies to launch new ventures using platform technologies .

Insurers will get a competitive advantage due to strategic partners and ecosystem - Survey statistic - by Accenture

As the digital customer demands more, no one insurer currently has all the answers. By starting now and experimenting with telematics, the benefits will pay off in the long term, whereas insurers who don’t, will be left behind.


This article has been co-produced in collaboration with James Gilbert.

Author: Toon Honig