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The Future of the Connected Vehicle

Many remember a time when the concept of a “Connected Vehicle” was out of reach. In the midst of the space race, the 1950’s and 1960’s vision of a connected vehicle seemed like something out of an episode of Flash Gordon or the Jetsons more than a viable reality.

Fast-forward to 2015, where vehicle features once considered the science fiction of tomorrow are here today.  Over the past five years, the connected vehicle market has grown at a pace 10 times as fast as the overall automobile market. It is projected that by 2020, the worldwide connected vehicle market will exceed $193 billion and 75% of all cars shipped worldwide will have the ability to connect. Clearly, the future of the connected vehicle is now.

Better Technology = Connected Car

Factors such as the rapid advances in computing power have given rise to connected vehicle innovation. A recent McKinsey & Company report states that today’s cars contain the power of 20 personal computers, have approximately 100 million embedded lines of code, and can process data loads up to 25 gigabytes per hour.  When compared to the Space Shuttle’s “measly” 400,000 lines of code used in it’s primary flight software, one can see the accelerated pace of technology (and why the Space Race is Over). Further, connectivity infrastructure and hardware have vastly improved in recent years. Telecommunication providers are working to expand the coverage of 4G LTE, public “hotspots” are popping up everywhere, and OEMs are designing automotive grade WIFI, enhanced Bluetooth technology and embedded cellular/GPS connectivity.

Beyond the technology advances, there is still one factor that has moved the needle most: the consumer and their response to the “Internet of Things” (IoT).

Iot and the Consumer (and Auto Industry)

The IoT has changed the world as we know it. As consumers, we expect to be connected to our “things” whenever, wherever, and however we see fit. The smartphone is an appendage that connects us to things around the globe.  Like Steve Austin, we feel we’re “better, stronger, faster” with our smartphones. We now use wearables to monitor our bodies to ensure that we are healthy. Our home thermostats and lights are controlled remotely to ensure our comfort and to optimize efficiency. The ways we shop, pay bills, go to school and work have become connected – suffice to say, connected is the new normal. We expect our cars to be connected things, too.

Auto manufacturers embrace the opportunities IoT provides to meet the connected customer’s unmet needs. Beyond the current in-vehicle infotainment features (such as streaming a Spotify playlist to your car), and convenience options (like navigation systems), auto manufacturers also see potential to make the roads a safer place. They are releasing vehicle safety systems that allow vehicle to vehicle (V2V) and vehicle to infrastructure (V2I) connections to avoid crashes and reduce severity. According to the Department of Transportation, V2V and V2I applications notify drivers of “roadway hazards and dangerous situations that they can’t see through driver advisories, driver warnings, and vehicle and/or infrastructure controls.

To the manufacturer, a connected vehicle and IoT is not only a means of creating a safer vehicle or a response to consumer need; connectivity also gives them the ability to manage the customer relationship and create additional revenue streams. Ultimately, these two work in harmony to create a more loyal service customer and increase brand consideration when it comes time to purchase a new vehicle.

The aftermarket solution

The trend seems to be connecting NEW vehicles, but what about the 233 million vehicles on the road that lack embedded connectivity? Although most people are driving cars that are nearly 12 years old, aftermarket solutions exist that can connect our older cars today. OBDII dongle devices used in usage-based insurance programs can provide countless safety and security service applications that can connect the car, improve a consumer’s quality of life, and fill unmet needs. For example, in the event of an accident, these devices are capable of notifying an insurance provider so that they can dispatch a tow truck, or arrange for a rental car.  This technology can also alert first responders if an accident may result in bodily injury. Just take a look at e-call in Europe; this service reduces accident response time by 50 percent, saves hundreds of lives and reduces the severity of tens-of-thousands of injuries annually. Further, dongles can provide vehicle location, giving parents peace of mind to locate their teen driver, or assisting in stolen vehicle recovery. These devices can even diagnosis DTC codes to save customers money and prevent inconveniences related to battery drain, coolant problems, and other service issues.

Clearly, the future of the connected car is now and consumers and manufacturers are harnessing this power today.  Are you currently connected?  Please let us know and share your experiences!

Keep Calm and Don’t Fear the Connected Car (PART 2)

So you have a connected car now. Maybe it’s equipped with an onboard telematics system, Wi-Fi and a fancy infotainment console to stream your digital music collection, or you have some connected phone apps, or you’ve just installed a device to share your driving data over the air. Forbes recently hyped that a connected car lifestyle is now a given, that customers expect continuous connectivity, and the government will continue to require more and better infrastructure connections for improved safety. Should you be afraid?

In my last blog post I’d highlighted several recent articles circulating in the media about the threat of car hacking. Congress is working on new legislation and regulations aimed directly at preventing car hacking, (6) but this costs money and there is significant controversy. Is a hacker going to single me out because I stream online music into my car or have a Usage-Based Insurance (UBI) device installed? Might my new connected car and everyone else’s be at risk to unexpectedly accelerate, brake, or shut off while I’m driving home today?

While no technology can be truly 100% risk free, it’s about balance and calculated risk. This is what insurance is all about. Are you still worried about data security when you make an online purchase transaction with your credit card or use an ATM to withdrawal cash while visiting a foreign city? Banks have made significant advances in recent years with protecting electronic transactions against hacking and fraud. Banks commonly use many of the same data security protocols used by the government and US military, which are certified through ISO, SSAE, and other international standards organizations. It’s the same for reputable UBI programs and Telematics Service Providers (TSPs).

Since its founding Octo Telematics has made compliance with international security standards and certifications a fundamental principle of everything we do. We are ISO 9001:2000/2008 and Standard UNI CEI certified and comply or exceed all requirements. Octo’s IT data security management is based on the ISO 27001 standard.

What does this mean for you when you’re participating in an insurance telematics program that’s “Powered by Octo?” It means peace of mind and lower risk to data security and privacy concerns.

When properly implemented, insurance telematics programs should not create any additional exposure to consumers’ privacy or data risk beyond the exposure we receive when we send emails or use cell phones to transmit personal conversations over wireless technology where location can be traced at any moment. Almost all cell phones today have built-in GPS, plus can be traced using tower triangulation. Are you worried about data security? You shouldn’t be with Octo, just make sure you’re using up-to-date technology with secure internet connections, the same as when using credit cards online.

Insurance companies are very good (and getting even better) with risk management and applying technology that is directly aimed at limiting risk. UBI programs powered by Octo enable insurers to differentiate between different types of driving behavior and reward those with lower potential liability and risk with lower relative insurance rates. The technology helps drivers be safer and insurers be more efficient in claims processing too, benefiting everyone involved.

One thing that can be certain is that UBI and connected car technology is expanding rapidly and will continue to proliferate. In North America the number of Insurance Telematics policies is expected to grow from 4.2 million in the last quarter of 2014 to reach 32.5 million in 2019.

The total connected car market is expected to generate revenue of $141 Billion by 2020.

Looking historically at how technology has exploded from the first personal computers in the late 70’s into today, going forward we’re certain to see even more of our life in the fast lane – with everything, all the time! The times they are still a changing, and the next few years are going to be quite a ride.

Keep Calm and Don’t Fear the Connected Car (PART 1)

You’ve probably seen myriad stories in the news lately about the risks of connected cars being prone to hacking, one going so far as calling 2015: “The Year of the Car Hacks.” Other stories have worrisome titles such as, “Car hacking: How likely is it to happen to you?” or “Hackers Cut a Corvette’s Brakes Via a Common Car Gadget.”

Although fascinating and certainly noteworthy for those of us enamored with car “gadgets,” none of this recent hacking frenzy is particularly new news. “Can Your Car Be Hacked?” was a feature story in Car and Driver magazine four years ago. And an excellent article by the Washington Post this past summer entitled, “Hacks on the Highway,” noted that in 2010, scientists from the University of Washington and the University of California at San Diego could hack into a car and control almost any computerized system within it.

Hacking into computer systems on a significant scale started not long after the first personal computers began to proliferate in the late 70’s. We should rightly credit “hacking” as being an integral part of the innovation and evolution process of technology. After all, it was the spread of nasty malware and viruses in the 90’s after the explosion of the World Wide Web that led to our having automated screening and security protocols on nearly everything involving digital data exchange today. Hacking is why we have virus protection and firewalls; this is also why each of us have so many usernames, passwords and PINs to memorize too!

So what about everyday driving in our modern, connected cars these days? Might my new car be at risk to unexpectedly accelerate, brake, or shut off while I’m driving home today? Is a hacker going to single me out because I have a UBI telematics device installed and force me to crash? Should I be afraid?

Well, according to the InfoSec Institute, which specializes in information security training, beyond the scary stories there are not many empirical cases of real world car hacking, except those done in a lab environment to push for exposing vulnerabilities. Still, the threat and potential is real so it’s important to be diligent and stay aware.

We shouldn’t be afraid of new technology if we exercise common sense, take reasonable precautions, and work together with other reputable people when sharing potentially sensitive information. Even though hacking into your car is technically possible, industry analysts predict that any real hacking threat will mostly be benign and nothing to lose sleep over. “Just about every smartphone on the market can already be hacked to do things it’s not meant to do and the car won’t be any exception.”

Personal precautions against having your connected car inadvertently hacked should include simple things like locking your car’s doors when leaving it unattended, paying attention to vehicle manufacturer recalls, using well-recognized and well-recommended hardware, software, and service providers, following their procedural recommendations, and of course not writing down account passwords on sticky notes. If you use phone apps to share data, make sure they are from trusted companies and kept up-to-date. Do you make purchases online? Make sure you’re using a recent browser with a secured connection. Do you own a GM vehicle with OnStar? Make sure you’re using their latest version of the RemoteLink app.

In my next blog installment I’ll talk more about the importance of data security standards and what these mean for insurance telematics applications and Usage Based Insurance (UBI) in particular. In the meantime, stay connected and drive safely out there!

Are Drivers Ready for Connected Cars?

Automotive telematics features and services are coming of age

How much have our lives changed over the last ten years? Probably not that much really, or have they? In June 2007, an event changed our lives forever, practically overnight. The launch of the first iPhone was arguably the foremost element that transformed us into a “connected society.” The rise of the smartphone introduced consumers to the benefits of immediate, real-time connection, drawing the Internet out of offices and homes and into our daily lives.

Now, only seven years later, there are more connected devices than individuals on our planet. We are constantly connected to colleagues and friends, to sales and special offers, to weather and news alerts. So, why should our cars be an exception?

Today, only 5% of our devices are connected to the “Internet of Things.” Now, consider that there are about one billion cars on our roads and that drivers are only beginning to learn and understand about the benefits provided by automotive telematics features. Our journey towards pervasive connectivity and the “Internet of Cars” has just begun.

The automotive telematics industry is ready. It has been for a few years, now. Connected cars are a reality. Connected services provide tangible benefits. Some services, such as GPS navigation, have been in existence for a number of years, while others, like emergency services and real-time traffic notifications are newer and further new services and features are constantly being introduced. So, it is only natural that automotive, insurance, OEM and telematics service industries ask themselves whether drivers are ready for a connected car.

A recent study by Ericsson and the AT&T Drive Studio indicates that nearly two-thirds of potential car buyers in the United States, Germany, Brazil, Japan and China will carefully assess automotive connectivity services when considering their next car purchase. In fact, the study also reveals that 72% of these drivers are willing to delay the purchase of a new car by a year to acquire a car with connected services. Furthermore, the study also indicates that half of these potential buyers are willing to buy a different car brand to get connected services.

Digital natives and early technology adopters are now on the road and eager to indulge in services providing navigation assistance, traffic and parking information, weather and news updates, but automotive connectivity will truly blossom as the new generation of connected natives, Generation Z, approaches driving age and car-buying potential.

Indeed, McKinsey&Company estimates that the value of the global market for connectivity devices and services will rise from the current €30 billion to €170 billion by 2020, in just six years’ time.

Connectivity is a product feature that lends itself well to the creation of new services. And services are what modern consumers desire above all else to save time, reduce hassles and improve quality of life.

At the Insurance Telematics Update 2014 Conference, Nino Tarantino, CEO, Octo North America, urged automotive insurers that the time had come to look to the future by improving and incorporating value-added services into their basic usage-based insurance packages. “In order to differentiate a telematics product and provide true value to customers, insurers must offer packages including a wider range of value-added services,” Mr. Tarantino emphasised. “A new generation of car drivers is coming of age.”

The Ericsson/AT&T study confirms that potential car buyers are a tech-savvy crowd and are well-acquainted with connected car features including roadside assistance (74%) and navigation systems and real-time traffic alerts (72%). Moreover, the survey also points out how, at present, other connectivity features, such as remote car activation (71%) and music streaming (70%), for example, are slightly less known. Whilst the idea of cars acting as a connectivity hubs that share and transmit telematics data to cloud-based databases and services is still something new for most drivers, these features are slowly becoming mainstream and will be brought to full prominence by our next generation of drivers, the connected natives.

In the meantime, connected cars are already on the road. There are drivers enjoying usage-based insurance policies, roadside and emergency assistance packages and location based anti-theft services. As more drivers learn about the advantages of usage-based insurance products, one of their main concerns will be the cost factor. Then, as the product enters the mainstream, attention will turn to value-added-services, as pointed out by Octo CEO North America Nino Tarantino.

In fact, the McKinsey & Company report indicates that 13% of buyers is no longer willing to even consider purchasing a new vehicle without Internet access and over 25% already prioritize connectivity over features such as engine power and fuel efficiency.

Yet, while drivers are eager to reap the benefits of automotive connectivity, there still are concerns about privacy, data use and hacker attacks. A second concern regards cost: only 35% of potential car buyers indicate they would be willing to spend more for smartphone-car integration and only 21% would be willing to consider subscription-based connectivity services.

These, however, are issues and fears that have gone hand in hand with the development of technology. Older generations were suspicious of telephones and television sets that were later adopted in mass. The same adoption curve will characterize telematics and the car connectivity market. Early adopters are already enjoying state-of-the-art telematics services. They will be followed by other drivers, who learn to appreciate attractively priced innovative services and a new generation that will be eager to be connected and pampered by new safety features and time and money saving options.

So are drivers interested in driving connected cars? Yes. Our prediction is that the “Internet of Cars” will precede and catalyse the “Internet of Things.” Drivers are ready. The market is in place. A new generation is reaching driving age. And everyone will soon be interested in new automotive telematics features and services as long as it’s a “good deal.”

On the Road with the Internet of Everything

How cars will merge into our connected lifestyles

It’s been a buzzword for years, now. The ever-illusive Internet of Things is coming soon and it’s going to streamline our lives by intelligently connecting all the devices on us, around us and, yes, even in us. It will automatically arrange everything from cooking our dinners to monitoring grandpa’s heart implant. This is what is commonly referred to as a smart or connected home, but what about our cars?

That’s the Internet of Cars or the Internet of Things and Cars or more simply the Internet of Everything. Indeed, a car is a device, albeit a very expensive one, and it operates in an even more data-rich environment than our smartphones and ovens.

A driver’s ecosystem presents a variety of both internal (car temperature, motor conditions, driver alertness) and external data (weather, traffic, road conditions). Indeed, cars themselves automatically operate a number of processes that can be constantly monitored and optimized. We hear claims every day about how, before long, our cars will drive themselves down digitally connected highways that will automatically alert us to traffic conditions, closed roads and accidents. Last, but certainly not least, connecting our cars with other devices and the broader mobile ecosystem means that our cars will converge seamlessly into our digital lifestyles.

Our cars are already teeming with digital technology, including systems for navigation, hands-free mobile communication, infotainment, usage-based insurance, stability control and anti-lock braking, but we are still at the dawn of the connected car. Automotive makers are eyeing systems for automatic braking, night vision and active safety systems controlled by interactive data analysis.

Safety First

Safety is clearly the topmost concern for a car driver. Telematics devices such as the Octo one already provide drivers with advanced information and safety features such as traffic alerts, stolen vehicle tracking and recovery and emergency calls, but the future clearly lies in full connectivity, especially amongst vehicles and between vehicles and emergency centres.

In the near future, drivers will receive real-time, intelligent traffic forecasts and road and weather alerts. Cars will automatically sense and react to safety data, while remote vehicle diagnostics will ensure greater vehicle maintenance and preventive safety alerts and measures.

Embedded vs. Mobile

As the automotive industry gears up for this connected future, one of the main issues that continues to rage is whether cars will embed their own telematics devices – sending, receiving and interacting directly with data – or whether our vehicles will interact with the ubiquitous smartphone app.

Octo, as we have seen, provides its own telematics device and services to insurers and policyholders, but it is also developing smartphone apps.

Carmakers clearly prefer the embedded device option, although it presents one fundamental issue: cost. Who will pay for the installation of telematics devices and Wi-Fi modems in cars: the factory or the client? Nor do the issues stop here. What about software updates? What happens if something goes wrong, will this affect the carmaker’s reputation? And what about data privacy? Cyber attacks?

Smartphones represent a viable and efficient alternative. First of all, the smartphone industry is already up and running. Smartphones are virtually in every driver’s pocket and there is a huge developer ecosystem available to create new applications, not to mention the large number of apps that have already been tried and tested and that are used day in and out by drivers around the globe. A further significant aspect to consider is that a third-party app would divert any problem or issue from the carmaker to the application developer.

This debate over embedded (in-car device) vs. mobile devices (smartphone) continues to brew. Indeed, the consensus among experts and industry leaders at the recent Telematics USA 2014 Conference was that, at present, a hybrid approach seems to be the only viable solution.

Where do we go from here?

A further variable is represented by consumer demand. A survey conducted by Gartner (Q1, 2014) indicates that most drivers currently seek basic services (traffic information, map updates, weather and news updates, parking information and Internet radio), but that there also is a growing demand for further value-added services, especially by the younger tech-savvy generation.

In fact, speaking at the Insurance Telematics Update 2014 Conference, Nino Tarantino, CEO, OCTO Telematics North America, urged insurers that the time had come to incorporate value-added services into their usage-based insurance packages. “In order to differentiate a telematics product and provide true value to customers, insurers must offer packages including a wider range of value-added services,” he underlined. And the same definitely holds true for the car industry.

Carmakers, in the meantime, are also thinking ahead: from diagnostics to prognostics. Vehicle smart systems can forecast where a driver is headed based on the time and the day or interact directly with a digital calendar. Intelligent systems employ predictive-user experience to suggest alternative routes or provide greater comfort, for example, by automatically heating cars. Even more importantly, data collection from telematics devices means that the intelligent system can alert drivers of impending problems, ranging from motor issues to tire consumption, before the car breaks down on a highway or is involved in an accident.

Clearly, the future will be based on the reception, transmission and analysis of individual vehicle data confronted with enormous amounts of real-time information and archived data on driver preferences, habits and driving styles.

Octo, a pioneer in insurance telematics, has already archived data and insight. Octo’s data centre currently stores driver behavioural data for over 241 billion kilometres.*


Today, we still face a clear divide – even a generational gap – between consumer expectations and the reality of automotive telematics, but there is no doubt that vehicles and roads will merge into our connected, digital lifestyles and into the Internet of Everything. It’s just a question of time.

We will have fewer issues with our cars and issues will create fewer hassles in terms of time, cost and safety. We will use our cars to move around, communicate and interact, and just like our smartphones, cars will provide us with a seamless digital experience.

*as of 30/06/2014

The connected vehicle

How in the near future all vehicles will be internet connected

The Internet has become an integral part of our daily lives. We are constantly connected to the Internet, either from our PC, tablet or PDA. And soon, our vehicles will be included in this list. In fact, we have been talking about connected carsfor a long time: these are a kind of vehicle that allows us to connect to the Net and to share information with mobile devices, including our smartphone.

Today, connected cars are not yet a reality, but are expected to become a standard in the upcoming years: according to a new report pubblished in March by Juniper Reasearch, (premier providers of Mobile Research) 92 million vehicles will feature technology which will integrate the smartphone into the head-unit by 2016.

Connected car: what will it be?

It is several years that technology and electronics such as on board computers, electronic control units and GPS, are strongly present in our vehicles. Yet, the automotive industry is getting ready to take a further step, by connecting cars to the Internet and by enabling them to share information with other electronic devices for drivers, especially with smartphones and tablets. The spread of Nfc and Cloud Computing facilitates interconnection. Near Field Communication(Nfc) is a form of short range (up tp 10 cm) wireless communication that enables either data transfer between PCs and mobile devices, or file transfer between wireless systems. On the other hand, Cloud Computing provides the opportunity to remotely store and archive data thanks to special software platforms. In this way, information can be retrieved at any time by simply remaining connected to the Internet. Therefore, in the future we will be able to download applications and maps and be updated on real-time traffic, fuel prices, accidents or route changes, direclty from our car. The spread of this new technology will inevitably bring some advantages, especially in terms of car localization (which should not be underestimated in case of accident or theft) and real-time updates on all the things that may be useful while travelling. On the other hand, the production of cars that are connected to the Internet and to other devices will increasingly accentuate electronics’ predominance on mechanics, a fact that is in part already evident. These are not the only devices that will exchange data and information. Market side, the Automakers will get to work and try to seek partnerships with big computer companies, so that to implement, but not only,  innovative technologies and new software on cars.

The projects

Today, it is already possible to put into words “work in progress” for interconnected cars: infact, some projects, that will have a key role in the production of future vehicles, have been launched. Among these Webinos, who has been financed by the European Commission, aims to create standards for the implementation of applications accessible from any device, from PCs to tablets, from smartphones to the car unit control. The project, which will be completed by August 2013, has brought in more than 20 partners, including institutions, software companies and automakers. Many leading automotive industries have launched a model that “puts into practice” the car connected concept. Some, for example, allow to view, receive real-time updates on the vehicle data (consumption, mileage, fuel level), calculate distances and speed. Information exchange with other devices is yet another prominent element: there should be implemented systems that send and receive data with other peripheral devices in every car.

In our future, therefore, not only will the boundary man-machine become more brief, but also the one between many devices that are now part of our everyday life.

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