Telemetry is revolutionising auto insurance. Telemetry is revolutionising auto insurance.

 Car insurance may not seem like a promising market for digital innovation, but when combined with a sensor that connects to vehicle diagnostics, it has the potential to revolutionise the industry.

The Australian start-up KOBA Insurance is using this strategy. It joined the market in February of this year with its main offering, a "pay as you go" model for auto insurance.

Telemetry is revolutionising auto insurance.

The market for auto insurance, according to KOBA's founder Andrew Wong, has not yet been significantly altered. The standard procedure is to receive a charge for a year's worth of insurance based on their evaluation of your risk and the size of the overall insurance pool.

The KOBA model, he explains, is to put control back into the hands of the drivers. Customers must first pay a one-time price to cover their vehicles while they are stationary in case they are sideswiped by another car or stolen. After that, there is a per-kilometer monthly fee.

According to Wong, drivers who travel significantly fewer miles than the 12,000 km per year Australian average may anticipate paying significantly less through this strategy.

Services for connected cars

The installation of the sensor, which not only records times and lengths of the trip to calculate insurance but, according to Wong, also enables KOBA to get into the connected auto services market, transforms the company from merely being another way of pricing insurance.

Behind the insurance, he explains, "there's actually a new and fascinating world because suddenly your automobile and an app on your phone are connected by data."

The connected car can in fact offer some genuine benefits. In the event that your automobile is stolen, connectivity will constantly update you on its location. Then there are informational services, such as alerts for when you need service, to buy tyres, or to keep a logbook for tax purposes.

"We are now providing a car care solution on your phone, and as an insurer, we are able to provide consumers all this other value beyond just selling insurance," the company said.

"When you consider the world of mobility, insurance solutions just cannot keep up."

Another new business venture for KOBA was to offer insurance for Car Next Door, a platform that allows owners to rent out their cars while they are not using them.

Many automobile owners rarely use their vehicles because they view them more as business than personal transportation. When a vehicle is being rented, the KOBA solution clearly defines who is in charge of it and transfers any liability to the consumer.

Lack of advancement in insurance

According to Wong, there is still some uncertainty around insurance in the sharing economy when a customer is operating a vehicle. With the KOBA system, insurance is included in the rental fee for Car Next Door customers, and the on-board sensor can accurately track when this insurance is enabled and deactivated.

He claims that when it comes to the mobility industry, insurance products are just falling behind.

It was also possible for them to build and market the new product in a matter of weeks, "not years as in conventional insurance," according to Wong, because KOBA is a technology-enabled, cloud-native firm, like Car Next Door.

The pay-as-you-drive insurance business model is not exclusive to KOBA. Wong claimed he would love to "claim to be the genius" who came up with it, but he acknowledges that other businesses are also using the strategy in various regions.

However, KOBA has somewhat of a first mover advantage in Australia when it comes to linked auto services as a third party as well as insurance.

it remains to be seen where this will go in the years to come as the market matures and new uses emerge, but KOBA is already there, upending traditional insurance and generating new sources of income by simply adding sensors to the vehicle and utilising the telemetrics industry.