Insight: Italian Government push for black boxes is premature

November 09, 2016

Problems with black box technology could scupper Italian Government plans to tackle insurance fraud. An amendment to the country’s competition law approved by the Senate Industry Committee in August would allow the government to mandate the installation of telematics devices on both public and private vehicles within the next 12 months. But over recent weeks, drivers already using the devices have seen significant problems, resulting in delays to insurance claims being processed. 

Devices are said to be inaccurately tracking vehicle location. The Italian Association of Road Accident Consultants, AICIS, has also claimed that the devices are failing to provide sufficient technical information about the dynamics of an accident. These faults make it impossible to accurately assess responsibility for the accident or whether there is fraud at play. This undermines the Italian Government’s primary driver for mandating increased use of telematics – to combat insurance fraud, particularly in southern Italian provinces where it is rife. 

Some insurance companies have put the problems down to poor installation of the device. However, manufacturers have so far been unwilling to respond to these claims, meaning that no-one is ultimately taking responsibility for fixing the faulty devices. In a worst-case scenario, poor quality installation could invalidate a car’s warranty, leaving drivers to foot the bill for any failure of the vehicle’s systems. 

Across Europe, Italy is the only country where driver information can be shared between companies, making it easier for insurance companies to sort out claims and price premiums more accurately. The possibility to share information has helped the diffusion of telematics, but consumer protection organisations have expressed concerns about privacy; the data collected is increasingly being used in lawsuits and criminal trials, leading to privacy concerns not yet addressed by the regulator. There are also questions about the portability of telematics devices, particularly if the driver or leasing company decides to move insurers. 

A recent study by the Italian Insurance Supervisory Authority, IVASS, revealed that black boxes are already fitted in 16% of cars insured in Q1 2016, or 4.5 million vehicles, compared with 13% in 2015. 

Figure 1: Europe, penetration of telematics usage by company size, 2015 

Source: Arval – CVO Barometer 2015  

Note: Europe comprises Belgium, Czech Republic, France, Germany, Italy, Luxembourg, the Netherlands, Poland, Portugal, Spain, Switzerland and the United Kingdom. Sample size = 4559.

Arval, the biggest leasing company in Europe operating more than 150,000 vehicles, believes telematics will become a key element in car leasing and fleet management. Telematics have been mandatory in all vehicles the company operates in Italy since January 2016. By the end of the year, it is estimated that black boxes will be fitted to around 35,000 vehicles. 

The company is keen to see telematics used more widely. Around 40% of total cost of ownership (TCO) is made up of factors that can be affected by driver behaviour. Monitoring driving performance to better manage fuel consumption and spend, CO2 emissions and fraud identification can lead to significant cost savings. The 2015 edition of the annual Arval Corporate Vehicle Observatory (CVO) Barometer reveals that fleet managers, particularly in large organisations, are keen to use telematics to manage fuel consumption, mileage and cost per driver. 

Figure 2: Europe, expected benefits of telematics usage by company size, 2015 

Source: Arval – CVO Barometer 2015  

Note: Europe comprises Belgium, Czech Republic, France, Germany, Italy, Luxembourg, the Netherlands, Poland, Portugal, Spain, Switzerland and the United Kingdom. Sample size = 4559.






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