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PTOLEMUS Consulting Group
Making the telematics business case work
Zagreb - 26th September 2013
Thomas Hallauer
Research a...
PTOLEMUS
PTOLEMUS in a nutshell
PTOLEMUS is the first strategy consulting firm focused on
telematics and geolocation
2
Mob...
PTOLEMUS
Why UBI matters
Source: PTOLEMUS 3
0
1
2
3
4
5
2006 2007 2008 2009 2010 2011 2012 2013 2014
Number of commercial ...
PTOLEMUS
Why UBI matters
Source: PTOLEMUS 4
0
1
2
3
4
5
2006 2007 2008 2009 2010 2011 2012 2013 2014
Number of commercial ...
Source: PTOLEMUS
What is insurance telematics?
• Most current insurance
policies use static / statistical
criteria to eval...
PTOLEMUS
What is UBI
Source: PTOLEMUS
There are many flavours of telematic insurance models
6
INSURANCE TELEMATICS
U B I
N...
PTOLEMUS Source: PTOLEMUS
There are many flavours of telematic insurance models
7
Behaviour-based
No behaviour
INSURANCE T...
PTOLEMUS
Where is it happening?
Source: PTOLEMUS
Usage-based insurance: European trials & launches
8
0 1 2 5 10 20 40
Euro...
PTOLEMUS Source: PTOLEMUS
Fundamental barriers to UBI
9
• It won’t work here
• Why give a discount when the
premiums are a...
PTOLEMUS Source: Insurance Europe
Fundamental barriers to UBI
10
• “It won’t work here
• Why give a discount when the
prem...
PTOLEMUS Source: PTOLEMUS - Note: * Or perception of privacy-related issues
In all markets, there are specific challenges ...
PTOLEMUS Source: Insurance Fraud Bureau, ABI, Progressive
The single most important driver of
telematics is... economics
•...
PTOLEMUS
New environment market drivers Regulation change
The insurance environment is moving fast and UBI will help
- The...
PTOLEMUS MTPL is Motor third party Liability. Casco: Casualty and Colision
New environment market drivers Regulation chang...
PTOLEMUS
Technology opportunities: adapting to the insurers requirement
Source: PTOLEMUS
The technology range used in UBI ...
PTOLEMUS
Technology opportunities: adapting to the insurers requirement
Source: PTOLEMUS
But only a few have been tested ....
PTOLEMUS Source: Uniqa
UNIQA "The first motor insurance that can save lives"
Objectives
•Differentiation
•Testing ground
•...
PTOLEMUS
Global UBI trends & best practices
Unipol has entirely designed the model that
suited its market conditions
18
Un...
PTOLEMUS Source: Progressive
The biggest success in Usage-based Insurance today
Progressive’s Snapshot programme
• 1.4 mil...
PTOLEMUS Source: Greenroad, Zurich, Have a Good Drive, Drivecam
Commercial vehicle are a great target market for UBI
20
Us...
PTOLEMUS
TSP perspective Insurer perspective
21
Insurers are however not just an “other fleet”
P i o n e e r s h a v e g o...
PTOLEMUS Source: Liberty Mutual
Liberty Mutual stopped selling Fleet Management Services
22
OnBoard Advisor 2
•Liberty int...
PTOLEMUS
Allianz has tested several telematic models on
European commercial line markets
23
Allianz, the Telematic Service...
PTOLEMUS Source: Autoline Insurance
Using a smartphone for insurance data collection is not
science fiction any more
24
Sm...
PTOLEMUS
Conclusion
Making UBI work means solving the following challenges
- There will be no iPod
- Focus on the real pro...
PTOLEMUS 3
Introduction to the 2013 study
“A truly comprehensive picture of the UBI market”
• 770 pages of rigorous analys...
PTOLEMUS
The first entrant advantage
Source: PTOLEMUS
The first entrant’s advantage
Octo’s DB of drivers data
(in millions...
PTOLEMUS Consulting Group
S t r a t e g i e s f o r M o b i l e C o m p a n i e s
Brussels - Paris - London - Hamburg - Mi...
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Ptolemus presentation in zagreb on Usage Based Insurance

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This presentation was made in September 2003 at the Telematics Conference SSE by Ptolemus to highlight the potential of Telematics Insurance in the area.

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Transcript of "Ptolemus presentation in zagreb on Usage Based Insurance"

  1. 1. PTOLEMUS Consulting Group Making the telematics business case work Zagreb - 26th September 2013 Thomas Hallauer Research and Marketing Director
  2. 2. PTOLEMUS PTOLEMUS in a nutshell PTOLEMUS is the first strategy consulting firm focused on telematics and geolocation 2 Mobile content and social networking Application stores, crowd-sourcing, etc. Navigation & location-based services Maps, traffic, fuel prices, speed cameras, parking, etc. Usage-based charging PAYD / PHYD insurance, Road User Charging, PAYD car leasing & rental Telematics & Intelligent Transport Systems Connected car, tracking, fleet management, eCall, bCall, Stolen Vehicle Recovery, Car As A Service, etc. Positioning / Location enablement M2M & connectivity Our fields of expertise Strategy definition New market entry Business plan development, board coaching and support Investment Evaluation Due diligence Market assessment Feasibility studies Innovation management Product & services development, roadmap definition, project management & launch, patent strategy Business development Partnership strategies, response to RFPs, lobbying Our consulting services Procurement strategy Specification of requirements, launch of tenders, supplier negotiation & selection Implementation Project & programme management, risk analysis & mitigation strategy
  3. 3. PTOLEMUS Why UBI matters Source: PTOLEMUS 3 0 1 2 3 4 5 2006 2007 2008 2009 2010 2011 2012 2013 2014 Number of commercial vehicles equipped with telematics Number of vehicles equipped with Insurance Telematics Usage-based Insurance (UBI) in Europe installs more devices in vehicles that telematics.
  4. 4. PTOLEMUS Why UBI matters Source: PTOLEMUS 4 0 1 2 3 4 5 2006 2007 2008 2009 2010 2011 2012 2013 2014 Number of commercial vehicles equipped with telematics Number of vehicles equipped with Insurance Telematics Usage-based Insurance (UBI) in Europe installs more devices in vehicles that telematics.
  5. 5. Source: PTOLEMUS What is insurance telematics? • Most current insurance policies use static / statistical criteria to evaluate drivers' risks - Age, gender, vehicle make & age, place of residence, occupation, etc • Insurance telematics is a policy based on these criteria and 4 new dynamic parameters Its basic principles Why UBI matters The driving risk star Distance Static criteria (statistical) Time PlaceDriving behaviour
  6. 6. PTOLEMUS What is UBI Source: PTOLEMUS There are many flavours of telematic insurance models 6 INSURANCE TELEMATICS U B I No telematics Telematics Current motor insurance Behaviour-based No behaviour PHYD PAYD PAY-PER-MILE (Self-reporting- based policies) STOLEN VEHICLE RECOVERY SAFETY SERVICES (eCall / bCall) CRASH FORENSICS U B I
  7. 7. PTOLEMUS Source: PTOLEMUS There are many flavours of telematic insurance models 7 Behaviour-based No behaviour INSURANCE TELEMATICS U B I No telematics Current motor insurance PHYD PAYD PAY-PER-MILE (Self-reporting- based policies) STOLEN VEHICLE RECOVERY SAFETY SERVICES (eCall / bCall) CRASH FORENSICS U B I Telematics What is UBI
  8. 8. PTOLEMUS Where is it happening? Source: PTOLEMUS Usage-based insurance: European trials & launches 8 0 1 2 5 10 20 40 Europe - Admiral - Ingenie - Allianz - Insure the box - Amaline - Linear - Aurora - Mapfre - Axa - Progressive - Aviva - Reale - Co-operative - Sara - Coverbox - The AA - Direct Line - Unipol - Generali - Zurich
  9. 9. PTOLEMUS Source: PTOLEMUS Fundamental barriers to UBI 9 • It won’t work here • Why give a discount when the premiums are already too low? • UBI require fundamental changes and IT power • There are better ways Insurers won’t make the first stepUBI trials and launches Making the UBI business case UK US Italy France South Africa Spain Canada Ireland Germany Belgium Netherlands Denmark Finland Sweden Australia Israel Japan 0 10 20 30 40 50 20,887
  10. 10. PTOLEMUS Source: Insurance Europe Fundamental barriers to UBI 10 • “It won’t work here • Why give a discount when the premiums are already too low? • UBI require fundamental changes and IT power • There are better ways” Insurers won’t make the first stepMotor gross written premiums - 2002-2011 (€m) 0 4500 9000 13500 18000 22500 Italy Germany UK France Spain Netherlands Belgium Austria Greece Czech Rep. Ireland Romania Hungary Croatia Slovakia Slovenia Bulgaria Making the UBI business case
  11. 11. PTOLEMUS Source: PTOLEMUS - Note: * Or perception of privacy-related issues In all markets, there are specific challenges to telematics 11 Italy UK France Germany Spain CEE Business case Technology solution Marketing strategy Sufficient data for scoring Customer privacy* Channels 2013 Challenges faced by insurers to launch UBI Making the UBI business case
  12. 12. PTOLEMUS Source: Insurance Fraud Bureau, ABI, Progressive The single most important driver of telematics is... economics • Better evaluate of risks: - Discriminate between safe and dangerous drivers, thereby enabling a decrease of insurer's combined ratio - Re-establish fair pricing between male and female drivers • Reduce claims by fighting against fraud, which represent £3 billion in 2011 or £75 on each driver's premium in the UK • Increase customer retention: rewarding the 75% of policyholders who pay for the other 25% most dangerous drivers 12 Costs: •CAPEX •Time •Mindset •Discount Making the UBI business case
  13. 13. PTOLEMUS New environment market drivers Regulation change The insurance environment is moving fast and UBI will help - The Monti law, which could make telematics a mandated offering for Italian MTPL insurers - The economic situation makes it difficult to acquire new customers - Fraud is endemic and costly - New target markets can be served 13 Main driver / Owner Vehicle Cover • Age • Gender • Marital Status • Residence • Number of children • Years with driver's licence • Type of licence • Occupation • Type of use • Make & model • Engine power • Weight • Age • Type of fuel • Value • Maximum speed • Driver / Owner same? • First vehicle? • No. of other vehicles in household • Yearly mileage • Burglar alarm? • Stolen vehicle recovery system? • Garage? • Type of price • Exclusions • Additional cover • Risk certificate (Accidents in past 5 years) • Bonus/malus class • Premium by instalments • Cover amount • Excess amount MTPL is Motor third party Liability. Casco: Casualty and Collision Making the UBI business case
  14. 14. PTOLEMUS MTPL is Motor third party Liability. Casco: Casualty and Colision New environment market drivers Regulation change The insurance environment is moving fast and UBI will help 14 We expect all statistical factors related to individuals to be forbidden within the next 10 years Main driver / Owner Vehicle Cover • Age • Gender • Marital Status • Residence • Number of children • Years with driver's licence • Type of licence • Occupation • Type of use • Make & model • Engine power • Weight • Age • Type of fuel • Value • Maximum speed • Driver / Owner same? • First vehicle? • No. of other vehicles in household • Yearly mileage • Burglar alarm? • Stolen vehicle recovery system? • Garage? • Type of price • Exclusions • Additional cover • Risk certificate (Accidents in past 5 years) • Bonus/malus class • Premium by instalments • Cover amount • Excess amount Making the UBI business case
  15. 15. PTOLEMUS Technology opportunities: adapting to the insurers requirement Source: PTOLEMUS The technology range used in UBI is potentially very wide 15 Fixed Removable Line-fitted Aftermarket Portable Semi-embedded system Vehicle keys Possible technologies for vehicle connected services PND Smartphone Speed camera locator OEM system Supplier system Black box FMS box Digital tachograph OBD device Self-energised connected modules DSRC tagCigarette-lighter device
  16. 16. PTOLEMUS Technology opportunities: adapting to the insurers requirement Source: PTOLEMUS But only a few have been tested ... 16 Fixed Removable Line-fitted Aftermarket Portable Semi-embedded system Vehicle keys Possible technologies for vehicle connected services PND Smartphone Speed camera locator OEM system Supplier system Black box FMS box Digital tachograph OBD device Self-energised connected modules DSRC tagCigarette-lighter device
  17. 17. PTOLEMUS Source: Uniqa UNIQA "The first motor insurance that can save lives" Objectives •Differentiation •Testing ground •Improved selection of risks •Better prevention of risks 2007 SafeLine Launch: •Tested with 300 customers •Used Octo •Offer device with crash sensor and eCall button •Minimum contract 3 years •5% discount on MTPL, plus mileage based discounts 17 Global UBI trends & best practices
  18. 18. PTOLEMUS Global UBI trends & best practices Unipol has entirely designed the model that suited its market conditions 18 Unipol, the pioneer The Italian market is strongly affected by fraud and a high level of vehicle theft • Unipol co-invented insurance telematics in Europe, together with Octo Telematics, in 2003 • It launched an offer that addressed the market key issues: - A professionally-installed black box that can offer stolen vehicle recovery - A crash analysis capability to fight against fraud • Also proposes automatic crash notification and a location-based breakdown service • Despite its complexity, the project has over 800,000 telematic customers Source: Unipol, PTOLEMUS AUTO Scegli la sicurezza che si adatta alla tua guida. KMSICURI YOU. L’ASSICURAZIONECHE FAITU
  19. 19. PTOLEMUS Source: Progressive The biggest success in Usage-based Insurance today Progressive’s Snapshot programme • 1.4 million customers • No fee for the device, self installed • Tariff set after a 30-day observation period • Discount can reach up to 25% • 75 days tracking period after which the customer is required to send the device back to Progressive 19 Key facts about the launch history • Launched PAYD trials as early as 1998 with the Autograph device • In 2004, launched TripSense which used OBD- II dongle • In 2008, launched MyRate, an improved PAYD offering • Latest product, Snapshot, was launched in 2010 • TTP: Davis Instruments initially; now Xirgo Technologies, Connectivity provider: AT&T Global UBI trends & best practices
  20. 20. PTOLEMUS Source: Greenroad, Zurich, Have a Good Drive, Drivecam Commercial vehicle are a great target market for UBI 20 Usage-based fleet insurance can work •High mileage and load-related risks •Fleet telematics is UBI technology •CAN-bus data is much more accurate •Driver safety is a crucial •Costs of accident •Installation •Fulfillment The effect of telematicson accidents is much bigger than fuel savings -70% -60% -50% -40% -30% -20% -10% 0% Incidents* Fuel consumption Global UBI trends & best practices
  21. 21. PTOLEMUS TSP perspective Insurer perspective 21 Insurers are however not just an “other fleet” P i o n e e r s h a v e g o n e through some challenges: •Insurance does not sell fleet management •No standards in telematics data •Risk Vs. and Performance management •Branding and communication Global UBI trends & best practices Be ready to climb a big step • No budget for boxes • No strategy • One year to decide • Very complexed needs • Raw data first
  22. 22. PTOLEMUS Source: Liberty Mutual Liberty Mutual stopped selling Fleet Management Services 22 OnBoard Advisor 2 •Liberty integrated 5 different TSPs •Same benefits and discount •Geotab, Teletrac, Telenav, Telogis and Trimble (PeopleNet ) OnBoard Advisor 1 •Retail network to resell FMS from GE Commercial Finance • Safety score •Fuel score •Insurance discount score. •15% discount in the first year •Max 40% discount at renewal. •No upfront hardware cost. Monthly fee charged for the GE services. Global UBI trends & best practices
  23. 23. PTOLEMUS Allianz has tested several telematic models on European commercial line markets 23 Allianz, the Telematic Service Provider • Created its own telematic business unit at a global level • Specifies & purchases a black box directly from its technology suppliers, notably MetaSystem • Launched a simple fleet management service (Mileage, time & trips, Pay per use model) in Italy, France, Germany, Spain, the Netherlands, Switzerland, Greece and the Czech Republic • Also proposes eCall, bCall and SVR • Sells it directly to its fleet customers through its commercial network Source: Allianz, PTOLEMUS Global UBI trends & best practices
  24. 24. PTOLEMUS Source: Autoline Insurance Using a smartphone for insurance data collection is not science fiction any more 24 Smart phone, smart insurance? • In June 2012, Autoline, a Northern Ireland broker, was the first worldwide to use a smartphone application to - Record driving behaviour data - Calculate drivers' score on a scale of 100 • The application is developed by MyDrive Systems, which has also developed the rating algorithm • It promises users discounts of - Up to 40% for App users - Up to 50% for safe drivers • The policies are underwritten by a panel of insurers Global UBI trends & best practices
  25. 25. PTOLEMUS Conclusion Making UBI work means solving the following challenges - There will be no iPod - Focus on the real problem first - Sell it as a service - Premium discount is not the whole story - Adapt the technology to the target market - Find a suitable financing mode - Fulfillment is where many trials failed - Many partnership models - SmartPhone model is an opportunity - Commercial vehicles can be an entry market - Understand the insurers needs 25
  26. 26. PTOLEMUS 3 Introduction to the 2013 study “A truly comprehensive picture of the UBI market” • 770 pages of rigorous analysis of the PAYD / PHYD market based on - 201 interviews in 18 countries - 330 figures and charts - 3 years of hands-on experience - Our knowledge of the ecosystem incl. OEMs and TSPs • 38 Case studies & teachings including Allianz, Amaguiz, Cobra, Coverbox, Insurethebox, Ingenie, OnStar, Hollard Insurance, Insurethebox, Liberty Mutual, MAIF- MACIF, Norwich Union, Octo Telematics, Progressive, Quindell, State Farm, Unipol, Uniqa, Zurich • A handbook of 45 + suppliers' solutions including our own evaluation & ranking • 10-year market forecasts - Country forecasts for Canada, China, France, Germany, India, Italy, Japan, Russia, South Africa, the UK and the US - Bottom-up estimates of the number of policies for each insurer in the US, the EU and in South Africa • Telematics Insurance market models - Markets’ readiness to UBI for 20 countries - 6 markets analysis* • A complete set of recommendations to Insurances, Regulators, TSP, OEMs and operators • A strategic analysis of the value chain evolution including - The impact of eCall - The role of the smartphone - The new patents and partnerships More than a research study, a real strategic market analysis * Italy, the UK, France, Germany, Russia and the US The point of reference for insurers, telematics suppliers, car makers and regulators Catch up with the telematics revolution USAGE-BASED INSURANCE Global Study All rights reserved - September 2013 - www.ptolemus.com 2013 EDITION The point of reference for insurers, telematics suppliers, car makers and regulators Catch up with the telematics revolution USAGE-BASED INSURANCE Global Study All rights reserved - September 2013 - www.ptolemus.com 2013 EDITION The point of reference for insurers, telematics suppliers, car makers and regulators Catch up with the telematics revolution USAGE-BASED INSURANCE Global Study All rights reserved - September 2013 - www.ptolemus.com 2013 EDITION
  27. 27. PTOLEMUS The first entrant advantage Source: PTOLEMUS The first entrant’s advantage Octo’s DB of drivers data (in millions of miles of driver data) 27 0 20 000 40 000 60 000 80 000 100 000 120 000 140 000 160 000 180 000
  28. 28. PTOLEMUS Consulting Group S t r a t e g i e s f o r M o b i l e C o m p a n i e s Brussels - Paris - London - Hamburg - Milan - Boston contact@ptolemus.com www.ptolemus.com Thomas Hallauer, Research Director thallauer@ptolemus.com +44 7973 889 392 @PTOLEMUS Any questions ?
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