usage based insurance

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Usage Based Insurance



Main Trends

• Smartphone-based UBI• Gamification Social networking

Agnik / Harman, leaderboards• Contextual analytics (zubie)• OEM interest

BMW partnering with Allianz on Fleximile for i3 / i8 Ford partnering with Marmalade (UK) & State Farm (US) GM partnering with Progressive GM joining Verisk Telematics Data Exchange Fiat – Carrot (Zurich Insurance) partnership Renault-Nissan – partnership with The Floow Skoda Smartgate

• Carrier interest AT&T Telefonica (Sparkassen) Sprint (IMS) Vodafone

“However, despite this flurry of launches, acquisitions, and investments, the global number of UBI auto insurance contracts is not expected to exceed 15 million by the end of the year, after more than a decade of trials, experiments, and a plethora of market introductions. This represents less than a 1.5% global vehicle market penetration rate! Surely, the mainstream car owner has not discovered UBI yet, despite some surveys pointing to increasing awareness levels. Or maybe consumers know about UBI but barriers such as privacy, complex processes, or simply a lack of perceived value and benefits keep them from subscribing? In any case, so far the UBI opportunity seems to be very elusive. Everybody just seems to be only dipping their toes into the water…”



Main Announcements

• Octo Telematics Try & Drive telematics platform for small insurers Solution for motorcyclists

• Metromile Personal insurance to Uber drivers Parking ticket warnings

• International expansion - Thailand (Bangkok Insurance), India (Tech Mahindra), Japan (Aioi), Canada (CAA SCO / Quindell), Australia (Ernst & Young and Baseline), Philippines (Risk & TouchMedia), Singapore (Quantum and Risk), Slovenia (Triglav)

• US DoT & Agnik - driver analytics, machine learning, game theoretic social incentives• NYCM Insurance launches inControl driver monitoring• Hitachi and Baseline launch CRM for telematics-based insurers• Scope launches telematics-based crash claims management• Mojio raises $8M Series A Round Led by Telekom Capital



Partnerships & Acquisitions

• CalAmp acquires Insurance Telematics Startup Crashboxx• SaaS technology vendor CCC acquires DriveFactor for US$22 million• Progressive partnering with Zubie• Cobra Telematics acquired by Vodafone• Octo Telematics acquired by the Russian Renova Group• TomTom partnering with Allianz in France• ATG Risk Solutions to use INRIX Road Weather data• The Floow & Agero - upgrade of Agero's Driver360 UBI platform• Generali Group acquires MyDrive Solutions (UK)



Smartphone Application UBI Approaches

• Allstate - DriveWise Mobile UBI app and Allstate Rewards

• Progressive - pilot Snapshot mobile app for iOS and Android developed by Censio (Progressive claims to have more than 3 million UBI users enrolled in its OBD-based Snapshot program)

• Octo Telematics - Octo U smartphone UBI app for both driving behavior data collection and use as a learning tool ; detects and ignores alternative modes of transportation such as train and bus and can be set to passenger mode. (Octo Telematics announced 3.7 million active UBI customers globally with more than 1 million telematics devices shipped to date in North America)

• Driveway Software - Recently closed a US$10 million Series A funding for further developing its Drivewise.ly smartphone-based UBI solution in cooperation with partners Pinnacle Actuarial Resources, AmWINS, and Deloitte.

• TOWER - SmartDriver app (New Zealand).• Tracker - iOS and Android driver behavior application (South Africa).• Wunelli (LexisNexis) / SPP - Mobile platform for identifying driving DNA (Australia, New

Zealand).• The Floow - RSA Scandinavia / Norway (Codan Insurance).• Tata Consultancy Services - Insurance Telematics Solution.



OBD Dongles vs Smartphone Apps vs OEM

• OBD dongles Plug-and-play but high cost Lack of flexibility (closed nature but open API OBD approaches are emerging - Mojio) Key role for raising consumer awareness / establish UBI category Also used for fleet telematics, consumer telematics, in-car Wi-Fi, aftermarket HMI, etc…

• Smartphone apps Standalone solution, no connection with vehicle required Low cost but also lower quality / accuracy / reliability Open platform – developer ecosystem Key role in scaling uptake – enabling next growth phase

• Embedded / OEM Leveraging connected car systems Integration with other applications and use cases (HUDs, active safety ..) Only way to realize mass market penetration

Proprietary OBD Open OBD Smartphone Apps Embedded / OEM

PNDs Smartphone nav apps In-dash navigation Cloud navigation



OBD-II Ecosystem and Value Chain Partnerships

• Three main players in the value chain:• Hardware- Module/device vendor• Connectivity: Carriers/MVNOs/M2M platforms• Services: TSP/Application developer

• Trend toward vertical integration:• Many vendors assume 2 or 3 functional areas in the value chain

• Carriers have their own M2M platforms or even function as TSPs (Verizon)• Module vendors also offering devices (Sierra: AnyDATA/Novatel Wireless)

• Preferred relationship between value chain participants

• Typical examples of value chain partnerships:• Progressive: Xirgo: AT&T• Esurance (Allstate): Modus: Sprint• AT&T: Audiovox• Verizon: Verizon Telematics: Delphi• Geotab: Garmin: u-blox• Zubie: T-Mobile: Best Buy/Amazon• Sprint: IBM: CalAmp: Esurance• RacoWireless: Sprint/T-Mobile/Rogers: Telit, u-blox, Cinterion• Kore Telematics: AT&T/Rogers: Novatel, Cinterion, Sierra• Novatel Wireless: TI/Qualcomm: DigiCore



Clusters – Use Cases; Integrated UBI

• Instruments - speedometer & tachometer • Navigation • Audio• Applications• ADAS and V2X alerts• EV range• Replacement of center console (Audi TT) – Display integration • Feeds from night vision cameras, 360° cameras, side view mirrors• Driving behavior and efficiency• Personalization – (aftermarket) skins



New Insurance Business Models

• Car sharing Uber drivers : split commercial / personal (Metromile) Consumers: insurance by use (per mile or per time unit) (Metromile) Consumer auto insurance shifts to commercial insurance (fleets)

• Advertising / retail revenues through awards for safe driving (AllState) • Prepaid models for low mileage (fixed number of miles)

Insure the box - top up additional miles 250, 500, 1,000 or 2,000 miles

•



Beyond UBI: Automotive Big Data

• New types of data Parking ticket warnings (Metromile) Weather (PSA, Volvo, INRIX,…) Safety (ADAS-sensors) Service Preventive maintenance (prognostics)

• Partnerships ATG Risk Solutions & INRIX (Road Weather data) Renault-Nissan & The Floow (”data analysis partner”)



UBI Market – Long Term Strategic Disruptions

• Active Safety and ADAS Insurers taking a conservative attitude

Statistical evidence for reduce accidents/claims lacking Drivers relying on safety systems resulting in more risky driving Higher repair costs (severity, expensive sensors)

• Driverless Vehicles Accident risk would be at least one order of magnitude lower Zero accident environment? Liabilities uncertainty – Vehicle / Driver / Car OEM / Road Operator?

• Car sharing Multi ownership Mixed usage

Metromile &Uber

Insurers’ expertise in automotive analytics, statistics, and, more generally, big data skills that will be one of the most sought after capabilities in a burgeoning Internet of Things



Recommendations for Auto Insurers

• Focus on discounts only is not sustainable• Prepare for a driverless future and disruptive change

Dramatic shifts in auto insurance: no vehicle ownership and no driver! Shift from consumer to OEM / infrastructure insurance (liability)

“insurance will become the responsibility of the manufacturer, as opposed to the driver” Shift towards collective / shared liability (NHTSA)

• Introduce new “Smart Mobility” insurance solutions Private / commercial splits Shift from consumer to commercial insurance (shared fleets)

• Explore involvement in the wider automotive Big Data / Analytics / IoE space Other types of data (weather, diagnostics) Monitoring system for how well the autonomous driving algorithms work, which might be

important, especially in the first years after the first introduction. Assessment of Cyber security and other new types of risks

Allianz investing in Argus Cyber Security Monetizing data

UBI is a stepping stone towards a smart mobility landscape consisting of shared driverless vehicles, multimodal transportation, and an experience-based, usage-centric IoE environment



Relevant ABI Research Reports

AN-1166 Based Insurance and Safety Telematics SynergiesAN-1686 Usage Based Insurance - Update and TrendsAN-1548 OBD Aftermarket Telematics SolutionsAN-1688 Driving Legislation and Liability IssuesAN-1689 Driverless VehiclesAN-1635 Connected Car CybersecurityAN-1486 Autonomous VehiclesAN-1954 Car Sharing and the New IoE Transportation Service EconomyAN-1936 Hyper Smart Transportation: Big Data, Virtualization, and Systemization

Insight AllState, Progressive, and Octo Exploring Smartphone UBI Apps: Nails in the Coffin of OBD Dongles?Insight UBI, Quo Vadis?Insight IBM and PSA Partner on Connected Car Analytics

usage based insurance

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