Insurers eye windfall from proposed satellite-based toll collection system

Lack of regulatory clarity complicates matters on third-party data-sharing

The National Highways Authority of India’s (NHAI) plan to switch to satellite-based toll collection system will not just eliminate the physical toll booths and the road congestion, but will also offer a significant opportunity to insurance companies to customise motor vehicle insurance based on real-time location data, according to insurers.

On Tuesday, the NHAI conducted a workshop on Global Navigation Satellite System (GNSS), for which it had floated tenders earlier this month.

According to preliminary deliberations in the run-up to the workshop, the authority plans to amend central motor vehicle rules to make fitting of an on-board unit (OBU) — a 24/7 location tracking device — mandatory. This OBU will be seamlessly integrated with the FASTag payment mechanism, allowing for toll deduction without a booth. This unit will collect location data every 5 seconds, and transmit it through every 60 seconds.

Road to monetisation  

Anurag Jain, union road transport and highways secretary, said that location data of users can be eventually monetised. According to insurers, motor insurance has largely been priced based on the assets. 

The price is usually based on the make and model of the car and premiums are charged uniformly even though claims frequency varies.

“GNSS can be a game-changer for the insurance industry. Today we use a lot of proxies. For example, we ask the customer to give a photograph of their odometer and then we decide how many kilometres a vehicle has been driven. We also capture the data on the basis of service records. A lot of manufacturers come with connected cars and we got a lot of information from that,” Rohit Daga - Business Head (Motor Insurance) at ICICI Lombard, said at NHAI’s workshop on GNSS. 

“But the penetration of those products is very limited. With this, we will know how many kilometres a customer is driving, which area they are driving in. The claim frequencies and accidental ratio would vary depending on the route. Based on this, we can delve into the micro-data and charge the customer based on their driving behaviour rather than having asset-based pricing,” he added.

According to Udayan Joshi, Chief Technical and Claims Officer with SBI General Insurance, who spoke at the same event, the system can help in saving lives as precise locations can be identified during accidents and help can reach faster during the “golden hour” — the first 60 minutes after an accident. 

“The industry and economy are also plagued by the menace of uninsured vehicles. Having the exact location of vehicles will help identify vehicles and ensure that they’re brought into the insurance net… the more people come into the insurance net, the lower will be the insurance premiums for every vehicle owner in the country,” he said.

The likely speed bump: Data privacy

However, in the absence of clear regulations on data sharing, there could be concerns over privacy of vehicle-owners and users, according to experts. 

“Something like the GPS data of cars can easily be provided to the ministry by car operators or manufacturers, and then the ministry can either buy it or using some other arrangement they can actually use it. This transaction is not new. But it is surprising to see that it is actually happening without the platform being launched and without us having a non-personal data policy,” said Disha Verma, Associate Policy Counsel, Internet Freedom Foundation.

“GPS location data of cars or like other vehicles is of course not purely non-personal data. It cannot be divorced from the person driving that vehicle or in that vehicle because it is geolocation data of the person also, and the car is also able to amass a lot of other personal information too, you sometimes sync your contact with the inbuilt system inside the car. So there are many ways in which a car manufacturer can amass data from you. It is not purely non-personal data, and there is an implication for individuals,” Verma said. 

NHAI Chairman Santosh Yadav said at the same event that the authority is cognisant of issues of privacy. The ministry of road transport and highways is currently deliberating on the way forward in this aspect.

In a discussion paper on Telematics Insurance, the non-life department of Insurance Regulatory and Development Authority of India (Irdai) had foreseen issues of privacy. 

“When an insured switches from one company to another, there could be issues relating to portability of data, the newer company may refuse to take cognizance of previous data. There could also be issues surrounding privacy of data and what data can be shared and what cannot. Implementing Telematics would involve cost. The cost would need to be integrated into the pricing structure,” the Irdai said. 

Eye in the sky

> NHAI plans to mandate a 24/7 location tracking device in vehicles 

> Move may offer opportunity to insurers to customise vehicle insurance based on real-time location data

> Customer can be charged based on their driving behaviour 

> But data privacy of vehicle-owners remains a concern 

> GPS location data of vehicles not purely non-personal data, say experts