Amsterdam - TomTom satnavs will in future help insurers tell
the difference between a good driver and a bad one under a scheme designed to
revive the Dutch navigation device maker’s flagging fortunes.
The company, which made its name as a maker of vehicle-based
personal navigation devices (PNDs), said it had teamed up with UK-based
insurance firm Motaquote to offer its first new insurance product, called Fair
Play, which gives the safest drivers lower premiums.
“Our entry in the insurance market with our proven fleet
management technology puts us at the forefront of a move that could help to
revolutionise the motor insurance industry,” said Thomas Schmidt, managing
director TomTom Business Solutions.
Schmidt said the focus in 2012 is to expand the product to
other insurance firms in Europe, where he expected thousands of customers to
use the plan.
The scheme gives drivers control over their own policy by
using driving ability and behaviour to allocate premiums, rather than risk
factors used by insurers such as postcode, gender, and age or vehicle, Schmidt
told Reuters.
“Drivers using the insurance product will have a TomTom
tracking unit fitted in their vehicles, allowing driver behaviour and habits to
be monitored by insurers and by improving driving style, you can drive down
your premiums,” Schmidt said.
Consumers that agree to the plan will pay for the TomTom
tracking kit themselves and start paying lower premiums immediately, providing
the driver takes on the feedback from the TomTom tracking device, according to
TomTom’s Richard Piekaar.
TomTom’s Business Solutions unit, including its fleet
tracking divison, which use the same tracking technology to track and monitor
truck drivers, fetches around 5% of group sales, or an estimated €65m in 2011.
Analysts were sceptical about the actual growth potential of
the new insurance product but several agreed Tomtom’s move to monetise its rich
data base of real time and historical driving data is a good sign.
“It is positive they are looking for alternative business
models and are being innovative. Linking the insurance market to telematics is
new, but there are uncertainties with regards to the business model,” said
Martijn den Drijver, SNS Securities analyst.
TomTom faces intense competition in its core PND market as
consumers increasingly opt for free or cheap navigation software as well as
cooler gadgets like smartphones and tablet computers.
It is now targeting higher-growth areas and new markets. It
increasingly sells navigation devices built into car and truck dashboards,
rather than the standalone versions, and sells mapping data and real-time
traffic services through smartphone apps and other devices.
TomTom, whose founders have a majority stake in the company,
competes in the PND market with Garmin and in the commercial digital map market
with Google and Nokia Oyj .