This article was first published in the 4th-quarter 2015 edition of Personal Finance magazine.

Telematics provides your insurer with a wealth of information about you. Not only can it track your vehicle at any point in time – invaluable in the event of a hijacking or theft – it can also monitor how and when you drive: whether you’re prone to speeding, harsh cornering, sudden braking or rapid acceleration, whether you drive at night a lot, and, crucially, whether you use your cellphone while you drive.

All of these behaviours indicate whether or not you’re a good risk. With that information, the insurer can risk-rate you more accurately, taking into account your actual driving behaviour, instead of just your age, gender and where you live, and set your premium accordingly.

Of course, knowing you are a habitual speedster who takes chances is precisely why you might not want a telematics device in your car. You probably wouldn’t want your insurance company to know that you were driving over the speed limit when you had that accident, for fear that this could be used to repudiate your claim.

But Themba Baloyi, the founder of Discovery Insure, the insurance company that has the most advanced telematics system to measure the driving behaviour of its clients, says this “should not and could not” happen. Data collected in no way influences the outcome of a claim, he says. Your insurer will, however, use the information to verify the time and location of an incident, and the data is available to the insurer for “general risk management and underwriting purposes”.

In fact, knowing you have bad driving habits is why you should have a telematics device in your car. Telematics has enormous potential to inspire behaviour change in motorists, and insurers are waking up to this fact. It’s no surprise that Discovery is ahead of the pack; if there is one company in South Africa that knows how to incentivise consumers to change their behaviour in order to manage risk, it’s Discovery. Having had huge success in getting members of Discovery Health Medical Scheme who join its Vitality programme to shift their behaviour from risky to less risky (rewarding those who don’t smoke, exercise frequently, eat healthily and have regular health checks), the company then introduced a system of rewards for Discovery Life clients and later Discovery Insure clients.

Anton Ossip, the chief executive of Discovery Insure, says it’s about “shared values”: in other words, if we all manage our risks, it’s not only good for us, it’s also good for the wider community; everyone benefits. This appeals to a growing number of consumers. He says the shared-values model has the potential to make an impact in the motor insurance space. “There’s a deeper societal benefit [to everyone becoming better drivers]; more people are affected by how you behave on the roads than by your losing your cellphone,” Ossip says.

Road accidents account for 80 percent of the cost of vehicle insurance and cost the country about 10 percent of gross domestic product (GDP), according to Discovery Insure. That 10 percent is based on the cost to the economy and societal harm from loss of life and the decreased quality of life because of injuries suffered as a result of road accidents. Ossip says if we were able to reduce road accidents by one-third, it could increase GDP by more than one percent a year, which would free up resources for improving the roads, among other things.

South Africa’s fatality rate on the roads is almost double the world average, according to a recent survey by Towers Watson, the world’s largest employee benefits company. Up to 90 percent of road accidents are caused by poor driver behaviour, Ossip says. “The main culprits are alcohol, speeding and distracted driving; the use of cellphones while driving is one of the top causes of distraction.”

This is where telematics provides essential data. Although it can’t measure the level of alcohol in your blood, for example, it can show that you stopped en route home from work, and where. It can show the time you left that location and if you were driving recklessly – for example, if you were speeding and texting while driving at the time of an accident. But insurers insist that the data is used more as a carrot than a stick.

“We can’t do two things that are diametrically opposed to each other,” Baloyi says, referring to both incentivising consumers and punishing them. “Our intention is not to catch anyone out; we want to change behaviour and give you the tools to assess how you’re doing.”

According to the Towers Watson survey titled “Telematics in South Africa: driving change”, published in July, 60 percent of South African respondents said they were definitely or probably interested in telematics, but this increased to 73 percent if the purchase of a policy came with a guarantee that their current premium would not increase.

South Africa’s biggest vehicle insurers offer you either an upfront discount if you opt for a telematics device or give you a material reward for good driving as determined by telematics.

A telematics device is not the same thing as a traditional tracking device; the latter doesn’t collect data. And they work off different technologies. Tracking uses a radio frequency, whereas a telematics device works off GPS and cellphone technology. But there are devices that combine the technologies.

Santam, South Africa’s biggest short-term insurer, will give you an upfront discount of 20 percent on your premiums in the first year of the policy if you opt for a comprehensive policy with telematics.

The discount reflects the fact that people who opt for monitoring tend to have a good risk profile, according to Attie Blaauw, the head of personal lines underwriting at Santam.

Outsurance also offers up to 20 percent off your premium if you fit a telematics device to your vehicle – but you don’t receive the discount upfront, and it’s not guaranteed. Your driving behaviour is monitored for 12 months after installation of the device, and if you drive badly and/or have a claim in that year, you don’t qualify for the discount.

Discovery Insure, which monitors more than 120 000 drivers through telematics, doesn’t offer you a discounted premium. Instead, it offers you a monthly reward of up to 50 percent (a discount of up to R800) of what you spend on fuel for good driving as recorded by your telematics device. You have to join VitalityDrive, at a cost of R60 a month, to benefit from the rewards and points you earn through telematics. Your fuel spend is recorded on your VitalityDrive card, and the reward is paid into your bank account the following month. To receive the fuel reward, you must fill up at a participating BP outlet, take your car for annual multipoint checks, and improve your driving know-ledge and awareness. You earn points for such things and, in so doing, improve your VitalityDrive status. The three levels are Neutral, Engaged and Advanced.

Although you wouldn’t be able to earn the maximum of 1 600 points in your first month, you are able to enjoy the benefits of good driving behaviour immediately. You can also earn additional points if you don’t claim for three years.

Ossip says the fuel reward can be seen as a discount on the premium, but it could also be more advantageous than a discounted premium. For example, if your premium is R800 a month, a 20-percent discount of R160 is much less than a fuel reward of R400. Members who have attained the highest status (Advanced) qualify for up to R800 off their fuel bill.

What it costs

Telematics offerings provided by insurers are linked to specific devices – so you need to install the insurer’s device to benefit from their value proposition. This is because the programs do not use a source code that is available to everyone. The downside with some of these deals is that you have to enter into a contract with a separate monitoring company.

To benefit from Santam’s telematics offering, policyholders sign a three-year contract with LiveTrack. It costs R174 (including VAT) a month for the first three years, then, once the device has been paid off, the price drops to R39 (including VAT) a month. Installation of the device, which is hidden inside the vehicle (for example, in a door panel), is free. The benefit of this product is that it provides both a stolen-vehicle recovery service and driver monitoring.

Outsurance policyholders pay R55 (including VAT) a month and must sign a two-year contract with Tracker Skytrax. This simple, small wireless device is for monitoring your driving only, not for vehicle recovery, so it is attached visibly to the inside of your windscreen. There is no installation fee.

If you cancel your insurance with either Santam or Outsurance, you are still bound to your contract with the tracking company, or you will have to buy yourself out it, effectively paying what you owe on the device and losing the insurance benefits.

Discovery Insure policyholders have two options:

* If you want a device for the dual purpose of vehicle recovery and monitoring your driving behaviour, a DQTrack device is installed in your vehicle. It is a hard-wired device, which has to be fitted by a qualified technician at a cost of R150 (including VAT). Thereafter you’re charged R50 (including VAT) a month, but you are not bound by a contract with a tracking company or Discovery Insure.

If you leave Discovery Insure, you have to return the device, or you will be charged a penalty fee.

* You can go for driver-monitoring only. Like Outsurance, Discovery Insure uses a wireless sensor attached to the windscreen, but this one operates in conjunction with an app that you must download onto your GPS-enabled smartphone. The moment you start driving, your phone picks up, via Bluetooth, the signal from the sensor and starts recording how you drive. It’s as accurate as a device installed in your car, Ossip says.

The sensor costs R150 (including VAT) once-off; there is no monthly fee. This product is ideal for clients who are already tied into a contract with a tracking company for vehicle recovery, such as Matrix, CTracker and Tracker Netstar. If you already have such a device in your vehicle, it should reduce your premiums because of the increased likelihood of your car being recovered following a hijacking or theft. But the reduction in premium depends on the profile of your car – in other words, how sought-after it is by car thieves.

How telematics works

If you’re insured and monitored by Santam or Outsurance, you receive a detailed monthly report via email showing you how you drove over the past 30 days. Outsurance also lets you view your report online, where you can generate trip reports or a log-book to claim a travel allowance.

Discovery Insure policyholders who are members of VitalityDrive receive their reports monthly via email, along with a scorecard. All components of scoring are broken down into sections, showing how you were rated for speed or braking, for example, so you can see where you’re doing well and where you’re doing badly.

Discovery Insure also has an app that allows you to view – after every trip – how you were rated for your driving. The app allows you to differentiate between private travel and business travel and lets you make notes and email trip reports to yourself for logbook/tax purposes.

Your choice

Although your insurer can make it a condition of your cover that you have a tracking device fitted to your vehicle for recovery purposes, it’s your choice whether you allow your insurer to monitor how you drive.

Because of the widespread use of anti-theft tracking devices in South Africa, we are less concerned about our privacy – our insurer knowing where, when and how we are driving – than people in other countries surveyed by Towers Watson.

What does, however, concern South African consumers is the prospect of their premium increasing as a result of monitoring; their insurer using the data to invalidate claims; their insurer sharing their data with other organisations; and their premium fluctuating, making it difficult to budget for insurance costs, the Towers Watson survey shows.


Is telematics driving behaviour change? Anton Ossip, the chief executive of Discovery Insure, says it is. The company’s clients show a 20-percent improvement in their driving, according to the insurer’s criteria, in the first year of cover, he says.

Every month, Discovery Insure pays out between R6 million and R7 million in fuel rewards to policyholders who are driving better. And as driver behaviour improves, Ossip says, so does claims behaviour – in other words, clients have smaller and fewer accidents.

“We hear anecdotally from members of VitalityDrive that they joined thinking they were good drivers, but when they got their stats, they realised they were actually quite bad drivers, and now they’re being incentivised to drive better,” Ossip says.

Discovery Insure clients use their cellphones while driving 20 percent less than the average South African driver, he says.

Interest in telematics is substantially higher in South Africa than it is in both the United States and the United Kingdom, according to a survey by Towers Watson published in July. More than two-thirds of South African respondents realise they could benefit from changing their driving behaviour, the survey found.

“When asked what particular driving behaviour they would be prepared to adapt, 78 percent said they would expect to pay greater attention to speed limits, 68 percent said they would drive more carefully, and 55 percent would be more conscious of keeping a safe distance from the car in front of them,” the survey says.

The survey also found that South Africans are second only to Spaniards in their level of interest in smartphone applications that monitor how you drive. Although retirement-age drivers are typically the most reticent about using them, the survey found that the majority of drivers in this age-group in South Africa would consider a smartphone product.

For three months in each of the past two years Discovery Insure has given all South Africans the opportunity to “test drive” its telematics offering via a smartphone app. The Discovery Insure Driving Challenge is a 13-week competition that rewards the best drivers in the country with BP fuel vouchers. Discovery Insure gives away R1 million loaded onto BP fuel cards during the competition, and you can win a fuel card to the value of R10 000. For each trip travelled, you are awarded a rating of between one and five stars. Each star equals a ticket in the draw. You are then given a score out of 100, based on the driving information collected from the app.

This year’s challenge revealed that the driving behaviour of participants improves with age, with participants aged 50 and older scoring more than 14 percent higher than those aged 30 and younger. However, the best drivers in the competition so far have been Discovery Insure clients. “Discovery clients aged 30 and younger scored better than all age groups of users who were not Discovery Insure clients,” Ossip says.

Overall, women scored better than men, demonstrating steadier acceleration, gentler cornering and less inclination to speed, whereas men were better at avoiding harsh braking and used their cellphones less while driving.

The good news is that this year’s challenge results showed that South Africans generally were using their cellphones less while driving, compared with last year. Using your mobile phone once during a trip makes it four times more likely that you will have an accident during that trip, according to the insurer.


You may be suspicious of technology, but you can’t deny its value in emergencies. When Louis de Bruin, his wife, Anke, and their two-year-old child were stranded on a deserted stretch of road in the early hours of the morning, his DQTrack telematics device came to the rescue.

“We were travelling back to Johannesburg from Leisure Bay in KwaZulu-Natal at about 3.30am,” Louis recalls. “We had been driving for about half an hour when I heard a mechanical noise coming from under the vehicle. Initially, I ignored it, but the noise got louder, and then I felt the car lose all power.”

Anxious about stopping on the side of the road, Louis quickly did a check underneath the car and noticed transmission oil pouring from the gearbox. “It was dark and it felt like we were in the middle of nowhere. It was my worst-case scenario – being stranded next to a dark highway at night.”

Just when Louis was about to try to contact someone for help, his phone rang. “It was within a minute of us stopping. A call centre agent from Discovery Insure had noticed that we had stopped driving and was concerned, because this was an unusual place to have stopped at an unusual time. I immediately felt better, and was told that they’d handle everything from their side and get us the necessary roadside assistance.”

Louis decided to try to drive a bit further to get as close as possible to the nearest toll plaza. Just before getting there, however, the car broke down completely.

“We got another call almost immediately: another call centre representative from Discovery Insure. Within five minutes, we had received confirmation that roadside assistance would be with us as soon as possible. As we waited the 30 or so minutes until the tow truck arrived, we received regular calls from Discovery to check up on us. It really made me, and my wife, feel a lot better that someone knew where we were.”

Ilan Ossin, the head of telematics technology at Discovery Insure, credits the fast response time of his team to the advanced technology that Discovery Insure uses as part of their insurance offering.

“Louis has a piece of technology installed in his car with a feature called unique driver profile that is able to detect unusual driving behaviour. In Louis’s case, it was very late at night and he had stopped somewhere out of the ordinary – so we were alerted to this and followed up with him immediately.”

After the flatbed arrived for his vehicle, the De Bruins were transported back to Leisure Bay. When it turned out that the car would be out of action for two weeks, Discovery Insure organised a rental car to take them home to Pretoria.

“As a family, we are beyond grateful for the support we received that night,” Anke says. “Who knows how differently things could have turned out if it wasn’t for this great service?”


Apparently, we South Africans really do love our cars. Discovery Insure surveyed its clients on how they relate to their cars and 80 percent of respondents said they feel physical pain when someone slams their car door. The insurer also found that:

* 60 percent of clients say they are emotionally attached to their cars;

* 70 percent wash their cars weekly;

* 58 percent made a life-changing decision in their car; and

* 90 percent believe they are good drivers.

The survey found that most popular car names, in order of popularity, are: Baby, Beauty and Beast.