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A.T. Kearney: Positioning for the Telematics Tipping Point
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A.T. Kearney: Positioning for the Telematics Tipping Point

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Here is one of the keynote presentations from the hugely successful Insurance Telematics USA 2010. …

Here is one of the keynote presentations from the hugely successful Insurance Telematics USA 2010.

During the presentation, two Vice Presidents from A.T. Kearney answer the following questions:
- How will the insurance telematics market evolve in the next 3-5 years?
- What are the implications for insurance companies?
- How should insurance companies position themselves for success in the face of uncertainty?

To view the presentation WITH AUDIO then click here:
http://www.telematicsupdate.com/insurance-telematics/presentations.shtml

Published in: Automotive

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  • This was was one of the most popular presentations at Insurance Telematics USA 2010.

    If you’re interested in the insurance telematics industry then you should join us at Insurance Telematics USA 2011 Conference & Expo (Sept 8 - 9, Chicago). According to Towers Watson, the event is “critical for players in this space”.

    Top speakers include: AT Kearney, Allstate, GM, Liberty Mutual, Towers Watson, Octo Telematics, AAA, The Hartford, Sprint, Delphi, the U.S. DOT, GMAC and Farmers Insurance.

    For more info, click here: http://www.telematicsupdate.com/insurance-telematics/
    And join us on LinkedIn: http://events.linkedin.com/Insurance-Telematics-USA-2011/pub/666137
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  • Go to http://www.telematicsupdate.com/insurance-telematics/presentations.shtml to view the full presentation with audio!
       Reply 
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Transcript

  • 1. 2010 Insurance TelematicsConference
    Chicago, September 13-14, 2010
  • 2. A.T. Kearney Introduction
    A.T. Kearney
    Joe Reifel
    Partner
    • Global management consultancy with offices in 37 countries across N. America, EU and AsiaPac
    • 3. Recent engagements in Financial Services:
    • 4. Business Strategy
    • 5. Marketing, Sales and Channel Effectiveness
    • 6. Customer Experience
    • 7. Innovation and Product Development
    • 8. Operational Excellence
    • 9. Enterprise Transformation
    • 10. Technology Strategy
    • 11. Advised companies in the US and EU on telematics, from strategy through pilot and launch
    Mike Hales
    Partner
  • 12. Key Questions
    How will the insurance telematics market evolve in the next 3-5 years?
    What are the implications for insurance companies?
    How should insurance companies position themselves for success in the face of uncertainty?
  • 13. 0
    Potentially large and rapidly growing market
    Insurance TelematicsMarket Potential
    Migration of Telematics-Based Insurance Offering
    • Strong consumer appetite – 30%+ of auto customers indicate willingness to adopt UBI
    • 14. Small base but rapid growth of UBI
    Active Safety
    Potential US market ~55M subscribers
    From Niche to Mass Market Appeal
    Based
    Feedback
    Customer Value Proposition
    Based
    Performance
    Current US market ~0.5M subscribers
    Based
    Usage
    Based
    Sources: Berg Insight; Frost & Sullivan; Consumer data from US and EU insurers; Insurance Research Council; A.T. Kearney analysis
  • 15. Significant value to customers and insurers
    Customers
    Insurers
    Reciprocity
    • Lower premiums
    • 16. Growth
    • 17. Quality of portfolio
    Safety
    • Driving improvement
    • 18. Accident response
    • 19. Lower loss ratio
    Claims Experience
    • Speed and convenience
    • 20. Theft prevention
    • 21. Lower loss ratio
    Customer Interaction
    • Value from insurer relationship
    • 22. Retention
    • 23. New markets and services
    US focuses on reciprocity and safety, while EU also embraces Claims
  • 24. Growth of usage-based insurance accelerating
    Delaying Factors
    Growth Drivers
    +
    Consumers
    Affordability
    Awareness
    Acceptance
    +
    Privacy – “big brother”
    +
    +
    Technology
    Cheaper
    Smaller
    Embedded
    Infrastructure
    +
    Installation
    +
    +
    +
    Regulatory
    Consumer protection
    Insurance regulations
    Environmental
    Safety
    +
    +
    Telematics Ecosystem
    Operating complexity
    Supplier ecosystem
  • 25. Embedded device for safety, diagnostics & roadside assistance – extensible for UBI
    OEMs embedding telematics
    From premium to mass market vehicles …
    … From optional to standard feature
    By 2014, over 20% of US vehicles are likely to have embedded telematics
    Source: 2009 Townsend report, Department of Transportation, Ward’s, Bureau of Economic Analysis, iSuppli , A.T. Kearney analysis
  • 26. An increasingly robust ecosystem
    Application & Service Providers
    Content Providers & Aggregators
    Access Network
    Devices
    Distribution
    Auto
    Home
    Always Connected Consumer
    Personal
    Winners and gatekeepers in the new space are yet to be determined
  • 27. UBI is approaching a tipping point
    Experiment
    Capture Advantage
    Protect Profitability
    2014?
    Today
    Tipping Point
    15+ years
    ~3-5 years
    When do you believe the industry will reach a tipping point?
  • 37.
    • Disintermediation – new entrants accelerate commoditization
    • 38. Non-insurance players dominate gateway and relationship
    Customer Ownership
    The Insurance industry faces uncertainties
    • Industry profitability lower
    • 39. Reduced rates for good drivers, but…
    • 40. Potential limits on rate increases for risky drivers
    • 41. Consumer backlash or poor experience impact brand
    • 42. External data ownership reduces the ability to differentiate
    Profitability
    Brand Differentiation
  • 43. Suggested strategy to win
    1
    2
    5
    3
    4
    Manage Unique Economics
    Establish Organizational Focus & Strategy
    Build Holistic Offering by Target Segment
    LeverageStrategic Partnerships
    CreateCompelling Message & Experience
  • 44. Have a plan … but be flexible
    1
    2
    5
    3
    4
    Manage Unique Economics
    EstablishOrganizational Focus & Strategy
    Build Holistic Offering by Target Segment
    Create Compelling Message & Experience
    LeverageStrategic Partnerships
    Create Strategy & Monitor the Market
    Create Organizational Focus
    Develop point of view on the evolution of telematics – new product vs. industry disruptor
    Create a flexible medium-term strategy, considering a portfolio of bets
    Understand and monitor the triggers that will impact your view on the market direction
    • Build dedicated team and executive sponsorship to enable speed to market
    • 45. Adopt incubator approach to accelerate innovation and contain complexity
    • 46. Align with core operations to enable smooth transition
  • Target offering to customer segments
    1
    2
    5
    3
    4
    Manage Unique Economics
    EstablishOrganizational Focus & Strategy
    Build Holistic Offering by Target Segment
    Create Compelling Message & Experience
    LeverageStrategic Partnerships
    Targetthe RightCustomer Segments
    Develop Tailored Offerings
    • Define telematics segments – consider need, size of market and likelihood of adoption
    • 47. Target both new customers and existing customer base
    • 48. Determine launch sequence and timing
    • 49. Define the core product & service platform
    • 50. Customize offerings and positioning by segment (e.g. safe drivers, teens)
  • Enhance the customer’s perception of value
    1
    2
    5
    3
    4
    Manage Unique Economics
    EstablishOrganizational Focus & Strategy
    Build Holistic Offering by Target Segment
    Create Compelling Message & Experience
    LeverageStrategic Partnerships
    Develop Differentiated Message
    Consistently Deliver Superior Experience
    • Convey reciprocity (savings), safety and convenience
    • 51. Create simple and sufficient message to enable customers to self-select
    • 52. Understand and manage privacy concerns
    • 53. Exploit telematics to deliver on key customer experience attributes
    • 54. Proactively take advantage of new and more frequent interactions
    • 55. Ensure controls are in place to deliver consistent CE across touchpoints
  • Create a partner portfolio strategy
    1
    2
    5
    3
    4
    Manage Unique Economics
    EstablishOrganizational Focus & Strategy
    Build Holistic Offering by Target Segment
    Create Compelling Message & Experience
    Leverage Strategic Partnerships
    … Structure and manage the relationship
    … Select the right partners …
    Understand the importance and role of partnerships …
    Operational Processes and Roles
    IP
    Org Structure
    Successful Relationship
    Relationship Governance
    Performance Management
    Longer term, need to partner with gatekeepers in the telematics ecosystem
  • 64. Understand and exploit the unique economics
    1
    2
    5
    3
    4
    Manage Unique Economics
    EstablishOrganizational Focus & Strategy
    Build Holistic Offering by Target Segment
    Create Compelling Message & Experience
    LeverageStrategic Partnerships
    … but also additional costs
    New sources of revenue …
    • Expanded markets and offerings
    • 65. Share of customer wallet
    • 66. Retention
    • 67. Customer acquisition costs
    • 68. Product costs
    • 69. Operating costs
    Costs
    Revenues
    ~ Margin: Underwriting revenue offset by Loss Costs
    Profit per customer
    + Growth: Customer acquisition + Retention
    Core growth
    + Growth: Expanded markets and offerings
    Unregulated growth
  • 70. Key Messages
    “Get in the market … and have a longer-term plan”– the market is evolving rapidly, by-standers run the risk of declining profitability and losing market share
    “Know your customer” – understand how to serve the customer beyond traditional insurance and leverage increased interactions to create value
    “Enhance your brand” – define your role in the telematics ecosystem, and take steps to differentiate and protect your company
    “You can’t do it alone” – partnerships are required to get to market quickly, to make multiple bets in the face of uncertainty as well as ensure longer-term success
    “Make the new economics work” – understand and exploit the economics of telematics to achieve growth while protecting or improving profitability and reduce cost barriers