COLOGNE — Germany’s leading car insurance company, HUK Coburg, may be set to join the automobile coverage revolution. Beginning next year, the company will offer its customers so-called "telematics tariffs," which feature lower premiums for those who agree to have their driving behavior remotely monitored via a special high-tech black box in their cars.
The practice has been used in several other countries and, though the Dusseldorf-based bank Sparkasse Direkt already experimented with it in 2014 to gauge interest, Germany is a special case because of particular concerns about privacy.
The economic benefits are hard to deny. Today, a typical 18-year-old driver registering a Volkswagen Golf pay annual liability insurance rates of at least 1,500 euro. But if the same driver were to have a telematics tariff, with the necessarily electronic monitoring device in his car, that insurance premium could be reduced by more than 400 euros.
These offers already exist in countries such as Britain, Italy, Ireland, and the United States. Germany has been notably late to this insurance innovation. Sparkasse Direkt last year finally equipped the cars of 1,000 customers with the special devices and rewarded the customers who displayed a cautious style of driving. The insurance companies AXA and VHV are also now expected to follow suit.
But the majority of German car insurance companies are still holding back. As opposed to Italian or British counterparts, German consumers are more concerned about data protection and are not willing to tolerate the permanent monitoring of their style of driving — even if this were to save them money.
But the doubts felt by most insurance providers towards this practice probably won't last. HUK Coburg, which is the leading car insurance provider with more than 10 million insured vehicles, has confirmed its interest in such policies and others inevitably are expected to follow suit.
Headquarters of HUK-Coburg in Germany — Photo: HUK Coburg
Here is an overview of the idea behind the concept: A black box or comparable system is installed in the car and determines the location of the vehicle via GPS, as well as constantly measuring the speed of the vehicle in comparison to the relevant speed limit in the area. The black box also registers how abruptly a driver brakes, and how he drives. The gathered data is transmitted constantly via radio to a data collection point.
The British way
With Sparkasse Direkt this is an external service provider, that analyzes the data and calculates a score. If the driver has a low score, the insurance premium goes down. The insurance provider only receives the scores, not the individual data, which remains with the external service provider, which in turn only knows the black box ID number but has no data concerning the customer. The customer is able to retrieve the data on the distance traveled and his/her score. This, the insurance company believes, secures the privacy of the customer sufficiently.
In Britain, other more intrusive methods exist. If a young driver is on the road between the hours of 11 pm and 5 am, he is immediately liable to a fine of 100 pounds, which the insurance company collects immediately. Such fines will not be introduced by insurance companies in Germany, whose main selling point is the reduced rate. The Hanover insurance provider VHV is offering a discount of 30% for recently qualified drivers. But the black box, that will have to be plugged into the cigarette lighter of the car, costs 130 euros, a cost that the customer has to bear.
"Cars nowadays already collect a vast amount of data and will collect even more in future," says Klaus-Jürgen Heitmann of HUK Coburg's board of directors. "The question now is if the insurance providers are going to be enabled to gauge the potential risks better by utilizing this data."
AXA chose a different path, deciding not to install specialist equipment. "Anyone who owns a smartphone and uses our app can avail of the special tariffs," says Daniel Schulze Lammers who is responsible for car insurance at AXA. The app monitors driving behavior. Those who sign up for the app will receive a general bonus and a credit entry depending on how they drive.
It is no coincidence that HUK Coburg is the first and most determined to offer telematics tariffs. It may be the leading car insurance company in Germany but it is, nonetheless, under pressure. Comparison websites such as Check24 and Verivox are enabling a thriving competition with online car insurance provider HUK24. So, the biggest player in the field is looking for new ways to offer tailor-made tariffs to their customers.
Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.
It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.
More than a year later today, experts believe that air traffic won't return to normal levels until 2024.
But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:
Cleaner aviation fuel
The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.
While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.
Fees imposed on the airline industry should be funneled into a climate fund.
In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.
Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.
High-flying ambitions for the sector
Hydrogen and electrification
Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.
One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.
Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.
New aircraft designs
Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.
International first class will be very nearly a thing of the past.
The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.
Aerial view of Rome's Fiumicino airportcommons.wikimedia.org
Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.
The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.
Data privacy issues
However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.
Auckland Airport, New Zealand
The billion-dollar question: Will we fly less?
At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.
Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.
40% of Swedes intend to travel less
According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.
But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.
At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.
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