New Central Bank Guidance On Use Of Telematics In The Private Motor Insurance Industry – Insurance

Insurers should take note of recent guidance on the use of telematics which
has been issued by the Central Bank of Ireland
(“CBI“) to private motor insurers (the
“Guidance“).  The Guidance follows
an assessment by the CBI of how telematics are being used by
insurers in Ireland.  

 Insurers should review any use of telematics in their
products in light of the Guidance. Documentation and commercial
models may need to be updated to take account of the
Guidance.  Insurers should note that the use of data generated
by telematics also has data protection and confidentiality
implications, which should be considered when deploying this
technology in an insurance context.  It may be that the data
protection statement for the relevant policy will have to be
reviewed and updated.

In summary, the Guidance provides as follows:

• The CBI notes that insurers use the data provided by telematics
  to assess excessive speeding, kilometre usage and in producing a
  driver score/rating;
• The CBI are of the view that, while such products can benefit
  consumers by providing access to insurance for inexperienced
  drivers and discounts on premiums, improvements can be made in how
  consumers are informed about the use of telematics products;
• Rather than simply providing more information on telematics to
  consumers, the CBI say that, based on its review, “more
  effective disclosure” is needed;
• Consumers should be made fully aware of what data is collected
  by the telematics device and what it is being used for, including
  whether such data will be used in potential claim and fraud
  investigations;
• Policy documentation should include a distinct section
  (separate from the standard policy wording) which provides this
  information to consumers in clear language, with the description of
  how data is used to be “neither overstated, nor
  understated“;
• It should be explicitly stated in policy documentation that
  where a telematics insurance policy is cancelled (eg for excessive
  speeding, low driver score etc), it may be more difficult for the
  consumer to obtain insurance in the future;
• Where insurers are outsourcing their telematics function to a
  third party, they should consult the CBI’s Discussion Paper on Outsourcing, published in
  2018, to ensure they are meeting their regulatory obligations
  in this regard.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.