One of the key developments set to transform the automotive market in the next few years is the introduction of the first digital keys. While the possibility of digital keys has been on the horizon for a while, this technology looks set to materialise with Hyundai Motor Group having just announced that they plan to roll out the first digital keys later this year. In this blog we take a look at how digital keys work and the challenges they pose for automotive insurance.
How do digital keys work?
Simply put, digital keys will provide a way of unlocking and starting a car using an app on the driver’s smartphone. It will also allow them to share the digital key with up to four other authorised users.
The locking and unlocking system works by activating near-field communication (NFC) antennas built into the car door handles. Once inside the vehicle, the driver places their phone on a wireless charging pad, which also contains an NFC chip, to start the engine.
One of the most interesting features that using a digital key could enable is the ability to have customised settings, such as seat positions and mirror adjustments, in the car saved for each user. These would be activated when the driver places their smartphone on the wireless charging pad.
The integration of smartphones with connected cars could be customised further to provide even more advanced features in the future. Digital keys will give drivers greater remote control over their vehicles. For example, if someone is expecting a delivery and will not be at home to collect it, they will be able to grant access to the boot of their car to the delivery driver for them to store the package, without granting them access to the rest of the car.
As the future of car ownership changes and we move towards a world where fewer people own their own vehicles, digital keys will become even more valuable. For rental companies, digital keys can be used to control some element of their vehicles remotely, such as the amount of time the renter can access the vehicle for.
The risks and challenges
At the moment, digital keys are not the solution to every problem. There are times when you may need to hand over your car for short periods of time, such as when you take your car for a MOT, which will still require a physical key of some type.
When it comes to security, there are pros and cons with using digital keys over physical keys. The pros are that digital keys are harder to clone and the risk of them being stolen is lower. Plus, it is easy to deactivate your key if your phone is lost or stolen.
However, there are also a new set of security challenges that come with digital keys. The major risk is that thieves will be able to gain access to keyless cards, whether it be through fobs or smartphone keys, by hacking systems to gain access to key codes. According to a study by Money Supermarket last year, three in five drivers said they wouldn’t buy a keyless car because they were concerned about hacking1
. Regardless, the move towards keyless cars is coming, and as systems become more sophisticated, the benefits of digital keys is expected to convince people to make the switch.
This type of huge shift in the way drivers interact with their cars undoubtedly has a significant effect on the automotive insurance industry. The Association of British Insurers (ABI) recently revealed that its members paid out £376m to cover stolen vehicles in 2018, a 29% increase on the figures from 2017 2
, with the ABI’s motor policy adviser saying that the amount ‘in part reflects the vulnerability of some cars to keyless relay theft’.
The rise in keyless car theft only reinforces the need for automotive insurers to cover cybercrime in their policies. If a vehicle is hacked, who is held accountable? It could be the driver, car manufacturer or maker of the digital system integrated into the car. These are questions that need to be addressed by insurers now with a keyless car future edging closer than ever.