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The Full Monti for the UK?

Insurance industry experts have warned that so-called 'telematics' boxes could be made compulsory in the UK. The Boston Consulting Group (BCG), who specialise in risk management and motor insurance strategy, told delegates at the recent Insurance Telematics Europe conference in London that the UK government was considering adopting 'Monti's Law' which led to the compulsory fitting of telematics boxes on all new cars sold in Italy.

Insurance industry experts have warned that so-called 'telematics' boxes could be made compulsory in the UK. The Boston Consulting Group (BCG), who specialise in risk management and motor insurance strategy, told delegates at the recent Insurance Telematics Europe conference in London that the UK government was considering adopting 'Monti's Law' which led to the compulsory fitting of telematics boxes on all new cars sold in Italy. This legislation was introduced into Italy in 2012 after being sponsored by Mario Monti, the former Italian Prime Minister. The measures were introduced in Italy as a means of combating the seemingly uncontrollable rise of fraudulent whiplash injury insurance claims.

Mr Ofir Eyal, principal management consultant at BCG, told the conference: "The transport minister is looking at this as a potential blueprint for how regulation might look in the UK." This, however, was disputed by roads safety manager, Steven Hammond, who dismissed the suggestion of an imminent move towards compulsory telematics boxes in the UK. He said: "The department continues to work with the insurance industry on the roll out of telematics products, which offer the potential to reward safe driver behaviour and penalise financially those who do not drive safely. It is up to insurers and drivers whether they use these products but we have no plans to make them compulsory."

Italy now has the highest penetration of telematics in the EU, with around 3% of cars carrying the boxes. This contrasts with a rate of only 0.3% in the UK. Industry observers, however, are predicting that use of telematic boxes in the UK is set to increase sharply in the coming years, even if there is no legislation making them compulsory. So far in the UK, the boxes have been aimed by the insurance industry at younger drivers. A study by BCG suggests that 15% of all car insurance policies across the EU could be linked to the use of telematics boxes by 2020.

Managing director of Ptolemus Consulting Group, Frederic Bruneteau, explained the importance of the technology to insurers: "Most insurers use static or statistical criteria such as age or location to evaluate a driver's risk. Insurance telematics takes into account these criteria, but gives four new parameters – distance, time, place and driving behaviour. It is the fastest growing segment of the insurance industry." It remains to be seen how these boxes will be accepted by the UK driving public but manufacturers such as Citroen are already beginning to add them as standard to new cars like the C1 in an effort to boost sales by keeping insurance costs down for younger drivers.
 

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