Will loyalty programme devices be used to refute claims?

My colleague Mark Bechard’s article on the increase in rejected claims because of reckless driving raises a few interesting questions about the possible use of technology when investigating such claims.

The Ombudsman for Short-term Insurance (Osti) quotes two case studies. In the first, the insurer was ordered to pay a claim after the Osti found that the conclusions put forward by an accident reconstruction expert were not based on accurate facts.

Interestingly, the Osti says that data from an on-board computer and vehicle tracking reports indicating the speed at which the vehicle was travelling when the accident occurred are generally accepted.

In the second case, the insured contested the calculation of the speed by the insurer’s expert but requested that the office decide on the issue of recklessness. The insured said that he was not familiar with the road, that visibility was poor because it was night-time, and the streetlights were not working. The insurer’s accident reconstruction expert calculated that the insured was travelling at 104km/h at the time in a built-up area where the speed limit was probably 60km/h. The Osti found in favour of the insurer.

Loyalty rewards

Discovery’s Vitality Drive rewards is possibly the most comprehensive programme aimed at assessing driving behaviour. Apart from a fuel cash back, it offers several safety features, including impact alert, weather warnings, a panic button and real time feedback on your driving behaviour. It even provides emergency roadside assistance when a vehicle breaks down within the borders of South Africa.

Driving behaviour is measured by installing a smartphone-enabled DQ-Track, which is made up of two components: the Discovery Insure smartphone app and the Vitality Drive Sensor. The app offers state-of-the-art safety features and measures driver behaviour, including sticking to the speed limit. Or not.

Discovery Vitality also offers a Standalone DQ-Track for an additional premium. Features include stolen vehicle tracking and recovery, driver DNA, which can detect whether someone else is driving the vehicle, and Geozones, which allows clients to set a safety perimeter for their vehicles.

Is Big Brother watching you?

Now, while it may sound as if I am punting this product, I have personally not made use of the facility, simply because of privacy concerns, and a few personal traits. When I am on the open road, and Bruce Springsteen is belting out Thunder Road, I tend to conveniently forget for a minute or two about things such as speed limits, only to be reminded a few months later when the summons arrives.

When I read the Osti newsletter, my first concern was that all the information stored on that nifty little gadget could well be highly incriminating should a claim arise, or, even worse, should a certain Minister of Transport cotton on to the idea that this may be yet another way of controlling the nation. Expect anything from a man who thinks reducing the “driving under the influence” limit to zero will stop that practice.

A broker that I spoke to assured me that Discovery had indicated very clearly that this would never happen, and I can understand why. Nothing could be more damaging to an insurer’s reputation than punting a product for one reason and then using it to refute claims.

Discovery has also confirmed that they are contractually bound NOT to use such information for any other purpose, including the assessment of claims. Due to time constraints we were unable to get their full response, but will publish it next week.

Other difficult to assess situations

The Osti’s briefcase contains several cases where claims were refuted as a result of the insured driving under the influence. In some instances, where the police did not conduct the obligatory testing, the insurer relied on testimony from witnesses, which can hardly be regarded as scientific.

We covered this topic extensively in an article titled Clarifying the OSTI’s role – It’s all about a balance of probabilities.

In view of the increase in claims being declined because of the insured breaching the contractual duty of care, it is important for advisers to revisit this important material condition contained in the contract when conducting annual updates.