1. 26 Middle East Insurance Review July-August 2016
Cover Story – Motor
C
onsumers are forever looking
for a better deal and price is
invariably the most influen-
tial factor when it comes to buying
insurance products. For consumers,
sacrificing some of their privacy is
increasingly being seen as a fair swap,
particularly when they are rewarded
with a tailored service and a cheaper
premium.
With most consumers happy to
share data, there is considerable poten-
tial for insurers to tailor their business
models and drastically minimise the
risk of losses.
Big Data and the momentum
behind analytics
As a relatively conservative industry,
the insurance sector’s use of big-data
and analytic solutions has lagged be-
hind other industry verticals. This is
despite the presence of new market en-
trants, and considerable advancements
in other areas of insurance technology.
However, we are beginning to
witness a considerable shift in both
thinking and approach. There are a
number of examples of prominent
early-mover insurers that have already
reinforced the benefits of Big Data, and
demonstrated how technology can cre-
ate direct savings, increase revenues,
and add an additional competitive
advantage.
There is a huge amount of evidence
to demonstrate that the big-data ap-
proach is a potential game changer in
the insurance industry, whether in the
Middle East or elsewhere.
The primary benefits for
insurers and the insured
One of the notable benefits of Big Data
centres on the improvements to areas
of the insurance value chain that, due
to better analysis and understanding of
customers, risks, and claims, generate
growth in the top and bottom lines.
Quite a number of insurance carri-
ers in the west are leveraging Big Data
to analyse their customer in greater
detail. Big Data is already helping
property insurers through analysis of
customers in the “smart home” moni-
toring household devices and systems,
from smart fridges to heating or fire
alarms.
US providers, such as Liberty Mu-
tual Insurance and American Family
Insurance, are already offering dis-
count to consumers in return for data
received from their smoke alarm and
carbon monoxide monitors.
Big Data produced by customers is
also being used in other areas of the
insurance industry, such as car cover-
age where the telematics technology
monitors driving behaviour to help
cut premiums for safer drivers. This is
Big Data can help turn
motor market around
The adoption of Big Data
and telematics will be
a game changer which
can’t come soon enough
for motor insurers
in the Middle East,
says Mr Pravar Gautam of
Scope Technologies.
Motor.indd 26 1/7/2016 11:37:29 AM

2. July-August 2016 Middle East Insurance Review 27
Cover Story – Motor
an area where there is considerable potential for insurance
carriers in the Middle East.
Telematics on the rise
The telematics technology has been embraced by a number of
motor insurance carriers globally. This innovative technol-
ogy allows insurers to price motor insurance in a bespoke
manner, as drivers are monitored across a range of factors
including distance, place, time and driver behaviour.
The technology also allows for streamlining the claims
experience, and reduce fraud through accident notification
and reconstruction functionalities which can provide com-
prehensive information on the accident including location,
angle, vehicle impact zone, and impact severity.
While telematics is by no means new to the Middle East,
insurance telematics is relatively new to the region. In recent
years, we have seen telematics technology being embraced
by a number of verticals in the region including oil and gas,
construction, transport, logistics and so forth.
Similarly, looking from an insurance perspective, there’s
been a rise in awareness levels amongst the insurance com-
munity, however we are yet to see any commercial insurance
telematics programme launches in the Middle East market.
As a pilot programme, Qatar Insurance Company (QIC)
recently launched a telematics programme with a view to
enhancing road safety, while providing incentives for cus-
tomers to use the technology in Qatar.
Current estimates suggest that there are over nine million
active telematics policies across the world and this number
is growing. In the US, almost all the major insurers have
launched telematics based propositions (also known as Pay
As You Drive and Pay How You Drive policies), with some
of them being quite innovative. We see a similar pattern in
the UK as well wherein all the major multiline insurers have
a telematics programme in place.
Using technology to improve road safety and
managing risks
Road safety has been in the spotlight for some time in the
Middle East and telematics adoption along with Big Data
can help improve it. Telematics technology can be used to
improve safety education as it alters driving behaviour when
consumers focus on lowering their premiums.
Furthermore, emergency services can be summoned in
the event of an accident automatically far before a human
can contact the authorities, leading to faster response times.
The UAE’s mobile phone networks will be capable of sup-
porting the government initiatives like eCall (emergency
call), enabling vehicles to call for emergency services in-
volved in traffic accidents. This is considered to be a major
milestone for the UAE’s Telecommunications Regulatory
Authority as they aim to drastically reduce the number of
fatalities by 2021.
Rising number of accidents, growing share of luxury ve-
hicles, high claims and fraud rates are perhaps very strong
drivers for insurance telematics and Big Data to thrive in
the Middle East. There are significant first mover advantages
associated with such an adoption and this can potentially
be a game changing opportunity for the motor insurance
industry in the Middle East.
Improving the claims management experience
Big Data is being used in a number of innovative ways and
Virtual Reality (VR) technology is now available for insurers
that can dramatically speed up a crash claim case, from a
number of weeks to just a few days.
At present, loss adjusters report on the validity of the
claim and make the appropriate recommendations. The ef-
fective use of Big Data with the VR will also increase the
accuracy of decisions, by providing data and an accident
reconstruction which has previously been unavailable to
loss adjusters. Through this reconstruction users can gain a
comprehensive overview of a particular accident in real-time
and from a remote location, as well as reducing fraudulent
activity and the number of sub-contractors required for on-
site or garage assessments.
Negating barriers to entry
The use of telematics and Big Data is by no means a straight-
forward move for insurers in the region, and there are a
couple of notable barriers to implementation which must be
negotiated. For example, the much debated privacy issues are
a constant and a number of consumers fear the big brother
element of being constantly monitored makes risk profiling
far more difficult.
In addition, there are also concerns around high data
transmission costs from the cellular networks, though the
data transmission requirements are minimal, there are high
tariffs associated with mobile data in the Middle East.
The good news is, these barriers were very similar to
those of other regions in the early days of insurance telemat-
ics, and there is a clear path to overcoming such problems.
Much of this can be achieved by creating a right in-country
ecosystem, and by clearly communicating the associated
benefits to both insurers and insureds for such an adoption.
Transforming insurance
Big data analysis has fundamentally changed many areas
of day-to-day life already and the insurance industry also
looks set to be impacted globally. The insurance carriers
in the Middle East can also leverage the power of Big Data
and underlying forensics to be more targeted in the risk to
underwrite, the customers they want to serve, streamline
their claims processes, and offer value added services.
Given the growing saturation of customer segments, it is
a good time to transform insurance business models by em-
bracing technological disruption or eventually face the risk
of getting left behind by the more tech-savvy competition.
Mr Pravar Gautam is Vice-President of Sales at Scope Technologies
VR Technology can allow insurers to replay an accident second by second
(Image: Scope Technologies)
Motor.indd 27 29/6/2016 4:10:41 PM