Insurance Telematics by Robin Harbage of EMB


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Insurance telematics is here to stay. See how you can claim your stake in this developing market.

-Analyze insurers’ timescales and plans for the next 5 years to ensure your services and product offerings are in sync with their internal strategies.

-Examine what lessons can be learnt from pilot schemes to determine how you can be one step ahead of the game

-Hear how telematics can revolutionize insurance pricing options and business models to create a win-win scenario for both the customers and the insurers

Published in: Automotive
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  • Robin is consistently a very popular speaker at our events and I am pleased to announce that he will be providing the opening keynote for this year’s Insurance Telematics USA.

    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: EMB (now part of Towers Watson), Allstate, GM, Liberty Mutual, Octo Telematics, AAA, AT Kearney, The Hartford, Sprint, Delphi, the U.S. DOT, GMAC and Farmers Insurance.

    For more info, click here:
    And join us on LinkedIn:
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  • Coverbox is the marketing name for Wunelli LimitedRoyal & Sun Alliance markets through MORE TH>N under the trademark Green WheelsItaly (AXA, Allianz, RealeMutua, Sara, Unipol and Aurora/Linear, Lloyd Adriatic)Hartford; WSJ – 6/26/08Milemeter launched in TX in NOV08
  • GMAC (34 states)Uses on-starRates -54% to -5% discounts based on mileageOther services available via on-starProgressive MyRateSelf-installed Xirgo deviceRates -61% to +9% based on time, distance, and behaviorTravelers IntelliDriveProfessionally installed, requires $100 and 12 month committmentParticipation discount, rates will vary depending on mileageOffers teen monitoring and vehicle locatorCSAA uDrive launched in NV in 2010
  • heavy drivers can still earn a 5% to 8% "safe driver" discount just for subscribing to the service
  • IntelliDrive Brochure
  • CSAA uDrive website
  • Insurance Telematics by Robin Harbage of EMB

    1. 1. © 2008 EMB. All rights reserved.<br />Slide 1<br /><br />
    2. 2. Usage-based Insurance: How soon? How fast?<br />Insurance Telematics 2010<br />Robin Harbage<br />C-Counsel Consultant<br />
    3. 3. Agenda<br />Who is EMB?<br />Insurer timescales and plans<br />Lessons from pilot products<br />UBI pricing options and business models<br />© 2009 EMB. All rights reserved.<br />Slide 3<br />
    4. 4. © 2010 EMB. All rights reserved.<br />Slide 4<br />Introducing EMB<br />Leading independent consultancy for P&C insurers<br />More than 300 employees in 12 countries in 6 continents<br />6 US offices; over 35 employees<br />Software and consulting are an important part of our services<br />
    5. 5. EMB Consulting facts<br />EMB consultants expertise gained over many years in the industry <br />Blend global best practices with local knowledge<br />Clients span the spectrum of companies<br />Personal and commercial<br />Small specialists to the very largest companies <br />© 2010 EMB. All rights reserved.<br />Slide 5<br />EMB has consulted with 28 of the top 30 global P&C companies<br />
    6. 6. EMB Software facts<br />EMB has sold over 3,000 licences worldwide to over 500 clients <br />Over 80% of theworld’s top 50 P&C insurance companies<br />9 of top 10 US auto insurers <br />19 of top 20 UK auto insurers<br />Over 55 companies in US, including small specialist companies<br />Tremendous support/development<br />US consultants (who use the products) handle support<br />50 developers / consultants and millions of dollars dedicated to software development each year<br />© 2010 EMB. All rights reserved.<br />Slide 6<br />EMB is the leading producer of actuarial software <br />
    7. 7. UBI TIMELINE<br />© 2008 EMB. All rights reserved.<br />Slide 7<br />
    8. 8. Consumer reaction positive<br />© 2009 EMB. All rights reserved.<br />Slide 8<br />UK survey found 63% of consumers declared strong interest in an insurance program to encourage safe driving<br />Response is 90% positive for monitored safe driving discount when including “possible interest”<br />Consumers overwhelmingly indicate an understanding and acceptance of the link between driving behavior and premium<br />
    9. 9. Regulators largely support UBI<br />© 2009 EMB. All rights reserved.<br />Slide 9<br />Unlike many innovations, regulators view positively<br />“Fairly” discriminatory<br />Saves lives<br />Environmentally friendly<br />Addresses affordability issues<br />Easily understood<br />EMB has experienced very positive reactions when introducing usage-based programs to the US market.<br />
    10. 10. State Climate Action Plans<br />14 states explicitly include PAYD insurance in their climate action plans <br />AZ, CA, CO, MA, MD, ME, MN, NH, NM, NC, PA RI, VA, and VT<br />© 2009 EMB. All rights reserved.<br />Slide 10<br />
    11. 11. Monitored Driving Programs<br />Hollard – SA<br />Uniqua – Austria<br />WGV - Germany<br />AXA – France, Ireland, Italy<br />Allianz – Italy<br />Lloyd Adriatic – Italy<br />RealeMutua – Italy<br />Sara – Italy<br />Polis Direct - Netherlands<br />MAPFRE - Spain<br />InsureTheBox – UK<br />Royal & Sun - UK<br />Coverbox – UK<br />AIOI – Japan<br />Real Insurance – Australia<br />Aryeh - Israel<br />Aviva – Canada & Europe<br />Progressive – US<br />GMAC - US<br />Liberty Mutual– US<br />American Family – US<br />Milemeter – US<br />Travelers – US<br />CSAA - US<br />Unigard – US (pending)<br />© 2009 EMB. All rights reserved.<br />Slide 11<br />
    12. 12. © 2008-2009 EMB. All rights reserved.<br />Slide 12<br />Telematics Timeline<br />
    13. 13. Important Questions<br />What are insurer needs to get started in UBI?<br />What are critical telematics functions for now, near term and long term?<br />What can insurers afford to pay for an economic telematics product?<br />What data is pertinent?<br />Is the data accurate?<br />How much data is required and when?<br />How to transfer, store, and analyze all this data?<br />What do consumers want?<br />© 2009 EMB. All rights reserved.<br />Slide 13<br />
    14. 14. LESSONS FROM UBI PROGRAMS<br />© 2008 EMB. All rights reserved.<br />Slide 14<br />
    15. 15. Then and Now<br />Early pilots used professionally installed OEM or after-market devices<br />Subsidized cost for learning<br />Inconvenient for consumers and low adoption rate<br />Multiple electronic makers offering devices<br />Device costs are declining<br />Reliable self-installed devices are available<br />© 2009 EMB. All rights reserved.<br />Slide 15<br />
    16. 16. Who is doing what in usage-based insurance (UBI)?<br />© 2009 EMB. All rights reserved.<br />Slide 16<br />Notable Programs<br />Several UBI business models exist<br />Many other companies, including small companies, are moving toward implementation<br />Liberty Mutual<br />MileMeter<br />GMAC<br />Verified Mileage<br />Safety Services<br />CSAA<br />Travelers<br />American Family<br />Behavior Rating<br />Progressive<br />Aviva<br />
    17. 17. Progressive’s SnapshotSM<br />Optional program with customer selecting which vehicles to enroll<br />Wireless device plugged into OBD II port records “how, how much, and when the car is being driven”<br />Device may be used for test period then discount applied until next endorsement<br />Significant discounts may apply for all major coverages<br />Approved in 23(+) states<br />© 2009 EMB. All rights reserved.<br />Slide 17<br />Game-changing program maturing and growing.<br />
    18. 18. GMAC Mileage Discount<br />Only available to OnStar subscribers in 35 states<br />Odometer readings sent from OnStar to GMAC with subscriber’s permission<br />Average initial discount of 26%<br />High mileage receive 5% discount for subscribing<br />Source: The Plain Dealer - July 17, 2008; WSJ - June 26, 2008<br />© 2009 EMB. All rights reserved.<br />Slide 18<br />Self selection is real.<br />
    19. 19. Travelers IntelliDriveTM<br />Discount for participation<br />Mileage used for rating<br />Data used for research<br />Additional services<br />Teen monitoring<br />Vehicle locator<br />Driving info at secure website<br />Initially required professional installation<br />Minimum 12 month, with $100 fee for early termination<br />© 2009 EMB. All rights reserved.<br />Slide 19<br />Difficult to get traction with professional installation.<br />
    20. 20. CSAA uDrive™<br />Available in Nevada<br />Discount up to 10% per vehicle for participation<br />Up to 5% additional savings at renewal under 10k miles<br />Information on driving habits via personalized website<br />© 2009 EMB. All rights reserved.<br />Slide 20<br />The number getting into the game is growing.<br />
    21. 21. Hollard in South Africa<br />Includes a minimum fixed premium and a variable premium based on the mileage of the vehicle for the specific month<br />Fixed premium includes coverage for at least 417 kilometers, a GPS tracking device, and non-collision losses.<br />Extra mileage is subject to a ‘small tariff’ per kilometer<br />“You can thus control how much you spend on vehicle cover premiums.”<br />Source:<br />© 2009 EMB. All rights reserved.<br />Slide 21<br />Consumers appreciate the control.<br />
    22. 22. UBI PRICING REVOLUTION<br />© 2008 EMB. All rights reserved.<br />Slide 22<br />
    23. 23. How does UBI work?<br />© 2008 EMB. All rights reserved.<br />Slide 23<br />Driver<br />Customer Feedback Loop<br />Improve Driving<br />Feedback <br />Policy Period<br />Market<br />Quote<br />Collect & Analyze<br />Company Feedback Loop<br />Improve Rating<br />Driving Score<br />Underwriting <br />
    24. 24. Appeals to participating consumers<br />© 2009 EMB. All rights reserved.<br />Slide 24<br />Once educated, UBI appeals to consumers<br />Makes sense<br />Controllable<br />Side benefits<br />As it is causal, reduces reliance on risk proxies<br />Insurance credit scores<br />Driver assignment<br />Charges for relatively rare accidents, convictions<br />
    25. 25. Tremendous predictive power<br />© 2009 EMB. All rights reserved.<br />Slide 25<br />Various studies demonstrate predictive potential<br />Companies gain competitive advantage through better segmentation<br />Elimination of cross-subsidization is more “fair” <br />
    26. 26. © 2009 EMB. All rights reserved.<br />Slide 26<br />Reducing Risk Cost with Telematics<br />Claims Effectiveness<br />HOW? WHERE? WHEN?<br />Non-fraud<br />Self-selection<br />Safer drivers<br />Risk Segmentation<br />HOW? WHERE? WHEN? HOW MUCH?<br />Risk Influence<br />HOW? WHERE? WHEN? HOW MUCH?<br />Risk Segmentation<br />Deriving risk factors from the data, and applying loadings / discounts to customers to enhance selection<br />Risk Influence<br />Customer feedback on behaviours to avoid<br />Reducing Vehicle usage overall, and especially higher risk miles<br />Claims Effectiveness<br />Informing the claims process<br />Use of telematic data as evidence<br />Self Selection<br />Reducing underwriting and claims fraud<br />
    27. 27. Improves driving and reduces accidents<br />© 2009 EMB. All rights reserved.<br />Slide 27<br />UBI experience significantly better<br />Early adopters will have increased profits and a competitive advantage<br />Norwich Union: 30% frequency reduction<br />GreenRoads: 54% improvement in fleet crash rate<br />Iceland postal service reduced crash rate by 56%<br />Pepsi (Iceland) reduced fleet crash rates by over 80%<br />Several UBI discounts > 50%<br />
    28. 28. © 2009 EMB. All rights reserved.<br />Slide 28<br />Added Value Services<br />Safe Driver Coaching<br />In vehicle feedback<br />Web site reports<br />Emergency Call<br />Detect significant impacts<br />Send text alerts (“Where am I” message)<br />Real-time service to dispatch help <br />Theft Service<br />Detect motion without ignition<br />Tracking and call for help<br />Geo-fence Service<br />Detect location outside boundary zone<br />Trigger notification<br />Subscription services could help subsidize the costs<br />
    29. 29. Data Uses<br />Data needed for loss cost models<br />Data consumer wants<br />Data for additional services<br />© 2009 EMB. All rights reserved.<br />Slide 29<br />
    30. 30. © 2009 EMB. All rights reserved.<br />Slide 30<br />Business Application<br />ImpactSensor<br />ImpactEvent<br />CrashData<br />RiskAnalytics<br />RefuteClaims<br />ClaimsHandling<br />AccidentResearch<br />EmergencyAssistance<br />
    31. 31. © 2009 EMB. All rights reserved.<br />Slide 31<br />Alternative Models<br />Dedicated Device<br />Insurance pays for device and install<br />Need self install to appeal to mass market<br />Reasonable cost<br />Ease of use<br />Shared Services Device<br />Device is able to support added value services outside insurance for example<br />Satellite Navigation<br />Rerouting to avoid Traffic Congestion<br />Theft Tracking<br />Speed camera warnings<br />Emergency Call etc.<br />OEM or hard install may be required for these<br />Technology will change, but data is critical now to get a foothold.<br />
    32. 32. What does this mean?<br />© 2008 EMB. All rights reserved.<br />Slide 32<br />Devices can track simple or very detailed driving behavior<br />Significantly increase pricing accuracy <br />Minimize reliance on detailed questions and controversial proxy variables<br />Help customers understand and eliminate risky behaviors<br />Differentiate product offering via additional services <br />All this means increased profits and retention!<br />
    33. 33. UBI is a significant advantage for early adopters!<br />© 2008 EMB. All rights reserved.<br />Slide 33<br />If provide feedback to drivers, can drive the costs down even lower to increase advantage<br />
    34. 34. Why now?<br />© 2009 EMB. All rights reserved.<br />Slide 34<br />There a numerous reasons why UBI is gaining momentum<br />Technology costs have dropped<br />Predictive power significantly enhances accuracy of prices<br />Participating consumers love it<br />Accident reduction potential<br />Politically accepted<br />Retention dramatically increased<br />
    35. 35. Contact Info<br />© 2008 EMB. All rights reserved.<br />Slide 35<br />Robin Harbage, FCAS MAAA<br />C-Counsel Consultant<br />EMB America LLC<br />622 Falls Rd<br />Chagrin Falls, OH 44022<br /><br />(440) 725-6204<br />