Octo OBD2: Revolutionizing Insurance with Advanced Telematics Technology

Octo Telematics is making significant strides in the automotive insurance industry with its innovative OBD2 telematics technology. Nino Tarantino, CEO of Octo Telematics North America, recently highlighted the growing adoption and potential of their collision notification and evaluation services, which are being rigorously tested by numerous carriers and poised for wider implementation. These advancements, centered around Octo Obd2 devices, promise to streamline claims processes, predict repair needs, and ultimately transform the insurance landscape.

One of the most anticipated capabilities, expected to be refined within the first quarter of 2018, is the ability to predict whether a collision-damaged part requires repair or replacement, along with accurate cost estimations. This feature, highly sought after by insurers, leverages the power of Octo OBD2 data to provide unprecedented insights into vehicle damage and repair expenses.

Recent announcements from Octo underscore the opportune moment for these transformative collision repair features to enter the market. The company proudly announced reaching 3 million North American policyholders utilizing usage-based insurance (UBI) powered by Octo technology. This remarkable 50 percent growth in just one year signifies the increasing acceptance of UBI, which relies on telematics – often delivered through Octo OBD2 devices – to offer personalized insurance premiums based on actual driving behavior, rather than solely on demographic averages. This shift towards UBI is intrinsically linked with the capabilities of electronic First Notice of Loss (eFNOL) and immediate crash analysis, both facilitated by Octo OBD2 technology.

Policyholders who opt for Octo’s usage-based insurance services, typically enabled through an Octo OBD-II plugin, often receive an initial discount of around 5 percent simply for installing the device. Following a period of driving behavior analysis designated by the insurer, drivers demonstrating safe driving habits can potentially unlock substantial discounts, ranging from 20 to 30 percent. This incentive structure not only rewards responsible driving but also generates valuable data through the Octo OBD2 device, benefiting both policyholders and insurers.

Octo Glimpse Plus OBD2 device, showcasing its compact design for easy vehicle integration.

Further solidifying Octo’s market position, the integration of their Glimpse Plus smart tag system with Guidewire, a leading insurance software provider, represents a significant step forward. This integration simplifies the process for carriers to implement policies based on real-time individual driving data collected via Octo OBD2 and related technologies. This seamless data flow enhances efficiency and accuracy in policy management and risk assessment. Additionally, Octo’s partnership with roadside assistance giant Agero, serving a significant portion of the U.S. insurer market, allows for automated crash notification and dispatch services, triggered by data from Octo OBD2 devices.

Benefits of Octo OBD2 for Insurance Carriers

Octo’s foray into claims-related telematics began approximately a year prior to the original article, with about 30 to 40 percent of their carrier clients actively testing or validating the use of crash data derived from Octo OBD2 devices for claims management. Tarantino emphasized the “huge” benefits for insurers, who traditionally operate in a “blind” environment when it comes to immediate accident details.

While Octo’s Glimpse Plus smart tag and Surround OBD-II plugin may not access the Accident Data Recorder “black box” used in forensic crash reconstruction, they effectively leverage data from a six-axis accelerometer, GPS, and other sensors. This rich data set enables detailed estimations of accident parameters, including impact force and direction. Octo’s sophisticated algorithms can even predict the probability of whiplash injuries based on the measured physical forces during a collision, all thanks to the data captured and analyzed from Octo OBD2 technology.

Illustration of G-forces measured by Octo OBD2 during a collision, used for accident analysis.

The repair versus replace cost estimations, a key advantage of Octo OBD2 systems, are derived from this telematics information. Octo’s system can access parts pricing via VIN lookup and draw upon extensive historical databases of repair invoices. While Tarantino acknowledged the “learning curve” in accurately deducing accident severity, the capabilities of Octo OBD2 are continuously improving in this area.

Implementing telematics in claims processing, particularly with Octo OBD2, may necessitate adjustments to policy terms and conditions. Transparency is crucial, ensuring customers are aware that crash detection and data access are part of the service. However, Tarantino pointed out the opportunity to frame this as a positive, customer-centric approach. European advertising campaigns have successfully highlighted the insurer’s ability to provide immediate assistance and care during a stressful post-accident situation, emphasizing “’We care about you.'”

“With telematics, insurance knows right away,” Tarantino stated, underscoring the speed and efficiency enabled by Octo OBD2. Carriers can proactively contact customers within minutes of a detected collision, offering support and initiating the claims process promptly, ensuring policyholders receive settlements “sooner.” The primary benefit for insurers, according to Tarantino, is a significant reduction in the “time to close the claim.” Octo’s European experiences demonstrate claim closure time reductions exceeding 50 percent through the use of telematics.

“There is a lot of opportunity for insurance carriers to use telematics to improve customer value proposition and bottom line revenue,” Tarantino emphasized. He cited statistics highlighting the impact of telematics: claims expenses representing a large portion of gross premiums, fraud contributing significantly to claim value, and delayed accident reporting leading to higher payouts. Octo OBD2 technology directly addresses these issues, improving response times and efficiency. The system also facilitates dispatching preferred towing services, offering further cost savings for insurers.

Octo Crash Dossier interface, displaying detailed accident data collected via Octo OBD2.

Regarding shop choice laws in the U.S., Tarantino clarified that while the Agero partnership offers efficient towing dispatch, policyholders retain control. The system is designed to offer assistance “if you want it,” allowing customers to decline and utilize their own preferred services, such as AAA.

Octo’s OBD-II plugin extends beyond accident scenarios. It can read diagnostic trouble codes (DTCs), providing valuable information for both claims processing and customer support. This capability allows insurers to assess vehicle condition and even advise customers if a vehicle is not safe to drive based on diagnostic data transmitted by the Octo OBD2 device. “We can provide all this information,” Tarantino affirmed.

Octo Surround OBD2 device, showcasing its capabilities for comprehensive vehicle monitoring.

Furthermore, Octo OBD2 technology proactively monitors vehicle health during everyday driving, sending diagnostic information to customers. This feature helps “diagnose and demystify the mysterious check engine light,” empowering vehicle owners with actionable insights into their car’s condition. Octo has also made significant progress in minimizing false positives in crash detection, addressing a potential source of customer annoyance. By refining their algorithms, Octo has reduced false positives to a low 3-4 percent, ensuring accurate and reliable crash notifications from their OBD2 systems.

Example of Octo Crash Dossier report, detailing key metrics from accident data captured by Octo OBD2.

The Growing Adoption of Octo OBD2 Telematics

Octo has been offering many of these telematics capabilities in Europe for several years. When questioned about the relatively slower adoption of telematics-driven crash analysis in the U.S., Tarantino suggested insurer competition as a potential factor. However, he confidently asserted, “I can tell you it’s going to happen,” citing Metromile as an example of a carrier already utilizing similar technology for claims processing.

Commercial lines, representing a smaller segment of Octo’s U.S. policyholders, are increasingly standardizing these features, recognizing the significant cost savings associated with Octo OBD2 telematics. The Guidewire announcement referenced a Ptolemeus Group forecast projecting 100 million UBI policyholders by 2020 and 50 percent of all vehicles covered by UBI by 2030. While these figures represent ambitious growth, Octo, as a global leader in telematics, aims to be at the forefront of this expansion.

“The market is huge,” Tarantino stated, acknowledging the vast potential of telematics and OBD2-based insurance solutions. Despite the market opportunity, Tarantino highlighted the competitive advantage Octo holds due to its extensive experience, having tracked billions of miles and analyzed hundreds of thousands of crashes. “This is our core service,” he concluded, emphasizing Octo’s deep expertise and commitment to advancing telematics technology and its applications in the insurance industry through Octo OBD2 and related innovations.

Clarification: Octo Telematics’ technology is used for 3 million usage-based insurance policyholders in North America. Globally, the company reports more than 5.3 million connected drivers.