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Insurance Telematics Survey - http://www.surveymonkey.com/s/3LHVQLY<br />Please take 10 minutes to complete our survey on ...
Usage-based Insurance: How soon? How fast?<br />Insurance Telematics 2010<br />Robin Harbage<br />C-Counsel Consultant<br />
Agenda<br />Who is EMB?<br />Insurer timescales and plans<br />Lessons from pilot products<br />UBI pricing options and bu...
© 2010 EMB. All rights reserved.<br />Slide 4<br />Introducing EMB<br />Leading independent consultancy for P&C insurers<b...
EMB Consulting facts<br />EMB consultants expertise gained over many years in the industry  <br />Blend global best practi...
EMB Software facts<br />EMB has sold over 3,000 licences worldwide to over 500 clients <br />Over 80% of theworld’s top 50...
UBI TIMELINE<br />© 2008 EMB. All rights reserved.<br />Slide 7<br />
Consumer reaction positive<br />© 2009 EMB. All rights reserved.<br />Slide 8<br />UK survey found 63% of consumers declar...
Regulators largely support UBI<br />© 2009 EMB. All rights reserved.<br />Slide 9<br />Unlike many innovations, regulators...
State Climate Action Plans<br />14 states explicitly include PAYD insurance in their climate action plans <br />AZ, CA, CO...
Monitored Driving Programs<br />Hollard – SA<br />Uniqua – Austria<br />WGV - Germany<br />AXA – France, Ireland, Italy<br...
© 2008-2009 EMB. All rights reserved.<br />Slide 12<br />Telematics Timeline<br />
Important Questions<br />What are insurer needs to get started in UBI?<br />What are critical telematics functions for now...
LESSONS FROM UBI PROGRAMS<br />© 2008 EMB. All rights reserved.<br />Slide 14<br />
Then and Now<br />Early pilots used professionally installed OEM or after-market devices<br />Subsidized cost for learning...
Who is doing what in usage-based insurance (UBI)?<br />© 2009 EMB. All rights reserved.<br />Slide 16<br />Notable Program...
Progressive’s SnapshotSM<br />Optional program with customer selecting which vehicles to enroll<br />Wireless device plugg...
GMAC Mileage Discount<br />Only available to OnStar subscribers in 35 states<br />Odometer readings sent from OnStar to GM...
Travelers IntelliDriveTM<br />Discount for participation<br />Mileage used for rating<br />Data used for research<br />Add...
CSAA uDrive™<br />Available in Nevada<br />Discount up to 10% per vehicle for participation<br />Up to 5% additional savin...
Hollard in South Africa<br />Includes a minimum fixed premium and a variable premium based on the mileage of the vehicle f...
UBI PRICING REVOLUTION<br />© 2008 EMB. All rights reserved.<br />Slide 22<br />
How does UBI work?<br />© 2008 EMB. All rights reserved.<br />Slide 23<br />Driver<br />Customer Feedback Loop<br />Improv...
Appeals to participating consumers<br />© 2009 EMB. All rights reserved.<br />Slide 24<br />Once educated, UBI appeals to ...
Tremendous predictive power<br />© 2009 EMB. All rights reserved.<br />Slide 25<br />Various studies demonstrate predictiv...
© 2008 EMB. All rights reserved.<br />Slide 26<br />http://paydpilot.ca/<br />
© 2009 EMB. All rights reserved.<br />Slide 27<br />Reducing Risk Cost with Telematics<br />Claims Effectiveness<br />HOW?...
Improves driving and reduces accidents<br />© 2009 EMB. All rights reserved.<br />Slide 28<br />UBI experience significant...
© 2009 EMB. All rights reserved.<br />Slide 29<br />Added Value Services<br />Safe Driver Coaching<br />In vehicle feedbac...
Data Uses<br />Data needed for loss cost models<br />Data consumer wants<br />Data for additional services<br />© 2009 EMB...
© 2009 EMB. All rights reserved.<br />Slide 31<br />Business Application<br />ImpactSensor<br />ImpactEvent<br />CrashData...
© 2009 EMB. All rights reserved.<br />Slide 32<br />Alternative Models<br />Dedicated Device<br />Insurance pays for devic...
What does this mean?<br />© 2008 EMB. All rights reserved.<br />Slide 33<br />Devices can track simple or very detailed dr...
UBI is a significant advantage for early adopters!<br />© 2008 EMB. All rights reserved.<br />Slide 34<br />If provide fee...
Why now?<br />© 2009 EMB. All rights reserved.<br />Slide 35<br />There a numerous reasons why UBI is gaining momentum<br ...
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Ubi Insurance Telematics

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Ubi Insurance Telematics

  1. 1. Insurance Telematics Survey - http://www.surveymonkey.com/s/3LHVQLY<br />Please take 10 minutes to complete our survey on vehicle insurance telematics.<br />To take the survey please click here.<br />Once you've completed the survey, you’ll have access to two exclusive presentations on Capitalizing on Opportunities in Usage Based Insurance, and Capturing Data to Produce Useful Information for Insurers.<br />As a further thank you for your help, we would also be happy to provide you with selected findings from this survey, once we have collated and analysed the data.<br />The survey can be filled in anonymously.<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: www.payasyoudrive.co.za/articles/cheap-car-insurance.html<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. © 2008 EMB. All rights reserved.<br />Slide 26<br />http://paydpilot.ca/<br />
  27. 27. © 2009 EMB. All rights reserved.<br />Slide 27<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 />
  28. 28. Improves driving and reduces accidents<br />© 2009 EMB. All rights reserved.<br />Slide 28<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 />
  29. 29. © 2009 EMB. All rights reserved.<br />Slide 29<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 />
  30. 30. 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 30<br />
  31. 31. © 2009 EMB. All rights reserved.<br />Slide 31<br />Business Application<br />ImpactSensor<br />ImpactEvent<br />CrashData<br />RiskAnalytics<br />RefuteClaims<br />ClaimsHandling<br />AccidentResearch<br />EmergencyAssistance<br />
  32. 32. © 2009 EMB. All rights reserved.<br />Slide 32<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 />
  33. 33. What does this mean?<br />© 2008 EMB. All rights reserved.<br />Slide 33<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 />
  34. 34. UBI is a significant advantage for early adopters!<br />© 2008 EMB. All rights reserved.<br />Slide 34<br />If provide feedback to drivers, can drive the costs down even lower to increase advantage<br />
  35. 35. Why now?<br />© 2009 EMB. All rights reserved.<br />Slide 35<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 />
  36. 36. Contact Info<br />© 2008 EMB. All rights reserved.<br />Slide 36<br />Robin Harbage, FCAS MAAA<br />C-Counsel Consultant<br />EMB America LLC<br />622 Falls Rd<br />Chagrin Falls, OH 44022<br />Robin.harbage@emb.com<br />(440) 725-6204<br />

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