Insurers say the National Highways Authority of India’s (NHAI) plan to switch to a satellite-based toll collection system will not only eliminate physical toll plazas and road congestion, but also provide a greater opportunity for insurers to customise motor insurance policies based on real-time location data.
The NHAI on Tuesday held a workshop on Global Navigation Satellite System (GNSS), for which it had opened bidding earlier this month.
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According to preliminary deliberations ahead of the workshop, authorities plan to amend the Central Motor Vehicles Rules to make it mandatory for vehicles to be fitted with a 24×7 location tracking device, an On-Board Unit (OBU). The OBU will be seamlessly integrated with the FASTag payment mechanism, allowing for booth-less toll deduction. The unit will collect location data every five seconds and transmit it every 60 seconds.
The path to profitability
Union Road Transport and Highways Secretary Anurag Jain said user location data can eventually be monetized.Insurance companies say motor insurance is primarily priced on the basis of assets.
Pricing is usually based on the make and model of your car, and you’ll be charged a flat rate for insurance even if you claim at different frequencies.
“GNSS has the potential to be a game changer in the insurance industry. Currently, we use a lot of proxies. For example, we ask the customer to provide a photo of the odometer to know how many kilometres the vehicle has driven. We will also get data based on service records. Many manufacturers are launching connected cars and we will get a lot of information from that,” Rohit Daga, business head (motor insurance), ICICI Lombard said at NHAI’s workshop on GNSS.
“However, the penetration of such products is very limited. With this, we can know how many kilometres the customer is driving and in which area they are driving. The frequency of claims and accident rates vary across routes. Based on this, we can delve into the micro-data and charge based on customer driving behaviour rather than asset-based pricing,” he added.
Speaking at the event, Udayan Joshi, Chief Technology Officer and Head of Claims, SBI General Insurance, said the system will help save lives by pinpointing the exact location of an accident and enabling faster rescue during the “golden hour” – the first 60 minutes after an accident.
“The industry and economy are also suffering from the menace of uninsured vehicles. If we know the exact location of the vehicles, we can identify them and ensure that they are included in the insurance net. The more people who are included in the insurance net, the lower the insurance premiums will be for all vehicle owners in the country,” he said.
Potential obstacle: Data privacy
But without clear regulations on data sharing, experts say this could raise privacy concerns for vehicle owners and users.
“Something like a car’s GPS data could easily be provided by the car operator or manufacturer to ministries, who could then buy it or use it through other arrangements. This transaction is not new, but it is surprising to see this happening in the wild without a platform being launched and no non-personal data policy,” said Disha Verma, associate policy adviser at the Internet Freedom Foundation.
“GPS location data from a car or other vehicle is of course not completely non-personal data. It is also geolocation data of that person, so it cannot be separated from the person driving that car or the people riding in that car. The car can also collect a lot of other personal information as well, it may sync your contacts with its built-in systems in the car. So there are lots of ways in which car manufacturers can collect data from you. It’s not completely non-personal data and it has personal implications,” Verma said.
NHAI Chairman Santosh Yadav said at the event that the agency is aware of the privacy issue and the road transport ministry is currently considering its next steps in this regard.
The Insurance Regulatory and Development Authority of India’s (Irdai) general insurance division had foreseen privacy issues in a discussion paper on telematics insurance.
“If an insured switches companies, issues around data portability may arise and the new company may refuse to recognise the previous data. There may also be issues around data privacy and what data can and cannot be shared. Telematics implementation comes at a cost and that cost needs to be built into the pricing structure,” Irdai said.
Eyes in the Sky
> NHAI to make 24×7 location tracking devices mandatory for vehicles
> Move could offer insurers the opportunity to customize car insurance policies based on real-time location data
> Ability to charge customers based on their driving behavior
> However, the privacy of vehicle owners’ personal information remains a concern
Vehicle GPS location data is not purely non-personal data, experts say