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New Central Bank Guidance on use of Telematics in the Private Motor Insurance Industry

co-author(s): Matthew Lambe Services: Insurance and Reinsurance, Technology and Innovation DATE: 19/10/2021

Insurers should take note of recent guidance on the use of telematics which has been issued by the Central Bank of Ireland (“CBI”) to private motor insurers (the “Guidance”).  The Guidance follows an assessment by the CBI of how telematics are being used by insurers in Ireland.  

 Insurers should review any use of telematics in their products in light of the Guidance. Documentation and commercial models may need to be updated to take account of the Guidance.  Insurers should note that the use of data generated by telematics also has data protection and confidentiality implications, which should be considered when deploying this technology in an insurance context.  It may be that the data protection statement for the relevant policy will have to be reviewed and updated.

In summary, the Guidance provides as follows:

  • The CBI notes that insurers use the data provided by telematics to assess excessive speeding, kilometre usage and in producing a driver score/rating;
  • The CBI are of the view that, while such products can benefit consumers by providing access to insurance for inexperienced drivers and discounts on premiums, improvements can be made in how consumers are informed about the use of telematics products;
  • Rather than simply providing more information on telematics to consumers, the CBI say that, based on its review, “more effective disclosure” is needed;
  • Consumers should be made fully aware of what data is collected by the telematics device and what it is being used for, including whether such data will be used in potential claim and fraud investigations;
  • Policy documentation should include a distinct section (separate from the standard policy wording) which provides this information to consumers in clear language, with the description of how data is used to be “neither overstated, nor understated”;
  • It should be explicitly stated in policy documentation that where a telematics insurance policy is cancelled (eg for excessive speeding, low driver score etc), it may be more difficult for the consumer to obtain insurance in the future;
  • Where insurers are outsourcing their telematics function to a third party, they should consult the CBI’s Discussion Paper on Outsourcing, published in 2018, to ensure they are meeting their regulatory obligations in this regard.

 For further information on the implications of the Guidance please contact Deirdre Kilroy, Darren Maher or your usual Matheson contact.