Australia: Insurtech: Telematics, AI and third party motor vehicle property damage

In brief - With the advent of insurance technology, what can insurers, assessors and lawyers expect?

Telematics involves devices or products that combine communication and data to provide a service. When applied to cars, telematics allows real-time monitoring of data such as location, speed and use, which is communicated to third-parties such as manufacturers or insurers.

Those third-parties can then more accurately price risk, by rewarding drivers with lower premiums where their data indicates safe driving practices, or by offering a policy that charges premiums on a per kilometre basis.

Increasing data integration brings efficiencies to car insurance industry

Shoshana Zuboff notes in The Age of Surveillance Capitalism that the process of integrating game mechanism (gamification) into geolocation apps is much more than a game. They are precursors to a world where hard geographic reality is overlain with a soft thick virtual embedded information layer that integrates the real environment with the digital environment. Telematics highlight the emergence of a world where data is automatically captured and communicated to insurers with real effect.

App and internet based maps and traffic systems have already integrated a thin virtual layer of data through marking static physical features, static road traffic or architecture (eg, speed limits and rights of way) with a relatively thick data layer relating to traffic flows based on a variety of networked data points.

Parallel with this is a state-owned public layer of data, comprising technologies such as traffic monitoring and electromagnetic switching traffic control architecture.

Newer cars can add to this data layer by integrating via base stations and the mobile communications network into the system.

As cars become more and more part of the Internet of Things, and the systems are married together, it will be possible to determine:

  • the exact location of a car accident leading to property damage (via geo-positioning, signals in the embedded architecture, and signals built into the car indicating the location of damage)
  • the speed and direction with which the cars were travelling
  • the position of each car in relation to the existing rules network
  • how many people were in the car, and
  • if a driver was intoxicated (via breathalyser enabled disable switches)

How might telematics affect third party property policies and knock-for-knock agreements between insurers?

Motor vehicle third party property policies indemnify drivers for the damage caused to other cars as a result of the insured's negligence.

Where an insurer has issued a first party property damage policy, that insurer will first pay out the damage to the insured's vehicle, and then locate any other insured driver whose fault led to the collision.

Traditionally, the insurer would then sue the at fault driver in the insured's driver's name via subrogation to recover the payment the insurer had made to its insured. That obviously only worked financially where the at fault driver has third party property damage insurance.

Given the costly and friction heavy processes involved in litigating, insurers developed knock-for-knock agreements, which essentially allowed each insurer to predetermine how liabilities that its insured drivers incurred to third party property holders were settled, and then netted off pursuant to a clearing arrangement.

The developing network architecture will very soon allow an insurer to dispense with much of the expensive parts of the knock-for-knock agreements (ie, claims officers and lawyers) by developing relatively simple algorithms that will operate via private block-chain or similar, that embeds certain prearranged rules to decide who pays whom, for example:

  • if insured driver A is driving more than 10 kilometres over the speed limit and insured driver B is driving at or below the speed limit, then insurer A pays insurer B for the damage to B's vehicle
  • if both cars are travelling over the speed limit, then the faster vehicle's insurer pays the other vehicle's insurer
  • if insured vehicle A breached a relevant road rule and insured vehicle B did not, then insurer A pays insurer B and vice versa

The fact that these algorithms can be set out here in short order shows that it will not be difficult to develop such a system.

How will telematics affect insurers, assessors and lawyers?

As the insurers are merely agreeing as to how their subrogation rights will be exercised, competition issues do not arise. However, the networked algorithm based architecture dispenses with the human-controlled algorithm (embedded in a set of written rules) that knock-for-knock agreements currently utilise. Of further interest will be whether Australia introduces a prohibition on automated decision making without human recourse (see Article 21 of the GDPR already has).

Of course, another casualty of this process will be assessors, because vehicles' inbuilt damage monitoring will report to the insurer which parts of the vehicle need repair, and those repairs can be carried out by a mechanic in a similarly networked and paid for system.

The final loser in this scenario will be the lawyers who act for the insurers in litigating responsibility for motor vehicle accidents.

Toby Blyth Bailey Neate
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions