IA publishes draft on telematics adoption
The Insurance Authority has published draft regulations concerning Telematics technology for property and liability insurers who plan on incorporating it in their underwriting. The draft regulation mentions that the application of telematics technology is optional for the owner of commercial sedans and four-wheel drive, pick ups, tankers and trucks, buses, motor cycles, rental vehicles
“The Company wishing to apply this technology shall provide the insurance applicant with the access to obtain motor vehicle insurance policy through conventional underwriting, if requested, and in accordance with the relevant legislation issued by the Authority in this regard. The company shall implement the Insurance Authority Board of Directors Resolution No. (25) of 2016 Concerning the Issuance of the Unified Motor Insurance Policy and the amendments thereof, including the Motor Insurance Policy Against Third Party Liability and Motor Insurance Policy Against Loss and Damage,” stated the draft.
The document also mentions that companies wishing to apply telematics should grant the insured an additional discount of maximum 10 percent from the insurance premium in addition to any other discounts defined under the legislation in force. Insureds will not bear any financial burden or cost resulting from installation of equipment and devices necessary to implement the telematics system, the draft stated.
The draft also provides guidelines for the application of telematics on motor vehicles. Firstly an approval will be necessary for companies wishing to use this technology and will need to submit an application to the regulator in this regard also with the Company’s application plan of telematics during the next three years, including the number of policies expected to be issued, and the value of the premiums expected to be achieved by the application of this technology. Companies will need to submit the cost analysis of implementing technology and installing devices. The underwriting policy will need to be submitted incorporating the bases it will adopt in determining premiums, elements affecting pricing all according to behaviour of the driver, distance travelled by the vehicle, and any other method required by the company for approval.
Other conditions include the percentage of discounts that the Company will give to the committed driver or the driver who does not travel long distance by his vehicle; the Actuary’s certificate including the principles adopted by the Company in granting discounts, in the faith that these discounts will not endanger the financial position of the company or lead to the loss of the Insured’s rights; the mechanism for paying premiums and the mechanism for granting discounts or rewards; an analysis of the risks associated with adopting telematics technology, and the precautionary measures and procedures to reduce these risks; as well as the contingency measures that should be taken in the event of failure of one or more elements of the electronic or smart system. This plan should include corrective measures to ensure continuity of work and submitting reports to the authorized persons within the company and the Authority.
All telematics devices installed in vehicles must be in compliance with the adopted UAE standards and companies should submit their plans for complaints submission and handling. Companies will be allowed to apply telematics only after obtaining written approval from the regulator.
Companies will be allowed to collect and analyse data regarding speed, overtaking style, acceleration, braking method, collision circumstances, severity of accident, time of accident and vehicle tracking. They will not be able to collect any additional information not pertaining to these parameters. However, the draft states that the Company may extract aggregate information for the purposes necessary to implement this decision only, and within the limits of matters relating to insurance exclusively, but without specifying or naming specific persons, their gender, nationalities or religion. Actuaries are also prohibited from collecting data from different companies on the insurance market in the country and analyzing their data for the purpose of circulation.
The draft also discusses information security and compliance with other government authorities such as the National Electronic Security Authority. It also mentions the receipt of consent from the insured to collect data on his/her vehicle. Other criminal and civil consequences will apply.
The draft seeks comment from the insurance industry before an official decision and circular is published.
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