For the Telematics category

Can Brokers Manage the Next Wave of IT?


As we look over the topics we have covered in this space, it occurs to us that the brokers might be getting hit with more IT than they expect over the next little while.  We’d like to know what you think, and, if you are part of the broker distribution value chain, what, you think needs to be done.  We do have one suggestion.

Our bias here…..

We are big fans of brokers.  Brokers tend to punch above their weight when it comes to creativity, resilience, and business savvy.  And, in spite of their fierce independence, and competitiveness, they can come together quickly and effectively to defend their own interests as well as those of their customers, and (yes, really) their insurance company partners.

And they can be a lot of fun.

That said, it’s not easy being purple* ….

In a hard market (if you don’t know what this means, ask someone with grey hair),  brokers have to work hard to maintain coverage for their clients at reasonable prices.

In the current market, brokers have to work to maintain their client base from competitive attacks by direct writers, captive agents, and fellow brokers.  And do so with a revenue stream that ranges from steady to decreasing.

Meanwhile, brokers have to retain talent (good producers and CSRs are always in demand), deal with non-revenue generating activities (endorsements, claims), and meet the demands of insurers and shareholders/partners/other stakeholders for ROI and (yes, really) growth.

Good brokers do all of this and more.  Many product enhancements and new covereages are broker driven.

Where does IT fit with brokers today?

Driven by client service and internal efficiency,  leading brokers were early adopters of office technology.  By the end of the 1970s, a critical mass of brokers had purchased large (for the time) turn-key broker management systems (BMSs) to handle client and accounting management.  By the end of the 1980s,  these systems were into their second and third generations.

Brokers also drove development of standardized connectivity between their offices and multiple insurance companies.  We’ve written extensively on the history of broker connectivity and our thoughts on next steps.  Suffice it to say that while no-one is really satisfied, there has been a lot of progress.

So, in addition to running the business, the broker has to commit cycles to using/supporting/maintaining/replacing complex systems.  In general, when a broker’s staff count gets to 10 or more, someone in the office will be spending more than 50% of his/her time on technology.

The next generation of technology doesn’t fit in easily ….

Here’s some of what’s happening now and what could be coming for brokers:

Social Media – This is more than a fad.  And it’s more than Facebook and Twitter.  Increasingly, consumers want to use they media they are most comfortable with and expect that suppliers will keep up.  Earlier this year, we posted on this.

Telematics and the Internet of Things – Most brokers have heard about Telematics/Usage Based Insurance.  The Insurance Brokers Association of Ontario is developing a broker owned facility – IBRI – which will offer brokers an option.  However, other insurers will have their own solutions and other risks (property, commercial) will be increasingly monitored by electronic sensors.  This “Internet of Things”  will drive underwriting/rating, claims, marketing data.  One outcome is that brokers will have a decreasing ability to supply quotes from their existing technology.

Big Data/Analytics - Insurers are expanding use of sophisticated analytics engines to work with Big Data for claims, underwriting, marketing.  While most brokers will not have the need or ability to have parallel systems, they will be required to understand and speak the same language as the insurer.

Customer Relationship Management (CRM) - Previous generations of customer database tools focused on the individual/family/business at the centre, with other elements – including insurance – as relating to one entity.  The more modern approach – required in our more complex data driven world – puts no one at the centre, but describes links based on relationships.  This is critical for the more sophisticated personalized marketing that is becoming a competitive differentiator with organizations such as and Google.

What to do?

For many brokers, the principal will be increasingly challenged to be the Chief Information Officer for her brokerage.  This requires a working (not necessarily technical) understanding and an ability to sort out the real opportunities, and attendant costs/efforts, for the brokerage.

We think that targeted education is key. is hosting Insurance2024, an executive forum on October 7, 2014 in Toronto which will bring experts to help insurer and brokerage executives understand trends for the next decade, and focus on key elements.

Take your future in your own hands. Reduce the overload.  And get back to having fun.


* Purple is the colour used in the Broker Identity Program

Pragmatic Telematics: Reality Trumps Theory in Chicago


I detected a noticeable change in tone at the Insurance Telematics USA conference held in Chicago last week. In prior years, much of the discussion was prognosis and guesstimation.  This year, the majority of presentations and conversations dealt with real-world issues relating to development, implementation, promotion, and utilization of telematics-based usage-based insurance (UBI).

I think this portends a solid future for UBI in Canada as well at the US. Here are a few examples, including my own personal experience.

Not if, but when and where …

As in the past, the kick-off keynote was presented by Robin Harbage, Director at Towers Watson.  Harbage noted that there has been a shift in attitudes by US consumers; with 52% of consumers interested in UBI, and another 27% who may be interested.  This could double the uptake in UBI from 4% to 8% sometime in the next 18 months.

According to Harbage,The primary concerns by consumers are:

  • Possibility of premium increases in future 48%
  • Privacy 39%
  • Denial of claims (based on telematics data 33%

Harbage noted that proxy implementations will continue, as most insurers will not invest heavily in big data infrastructures before some proof of concept.  However,  Harbage recommends insurers to move from proxies, increasing the granularity of the data used and adding contextual information, such as road conditions, weather, etc.  Failure to do so reduces the value of the UBI program as a strategic predictive modelling tool.

Not why, but how and who …

Progressive Insurance continues to be the recognized UBI leader in the US.  David Pratt, Progressive’s General Manager of UBI, focused on Progessive’s  evolving marketing strategy, outlining the data-driven campaigns the company has used to drive uptake.

The first phase was simple awareness of the program, ‘Snapshot’, using Flo, the popular Progressive spokeswoman, who stressed the benefits of good driving, and the simplicity of installing the device.  (This blog noted the theme  in an August 2012 post.)  Phase two was more direct, challenging good drivers to test drive the product.

For phase three, Pratt noted that consumers had expressed concern that poor drivers were forcing increased premiums for everyone, regardless of driving behaviour.  As a result, Progressive changed the tone of the ads, showing Snapshot as a cure for ‘Rate Suckers’  (bad drivers portrayed a leaches sticking to the windshields of good drivers’ cars).

Pratt gave the audience a preview of some of phase four material, coming out this month.  To address interest expressed by customers, Progressive describes what the Snapshot device does, using cartoon character to emulate the device, riding around in the car as a companion.

Pratt was careful to point out that its marketing/advertising is data driven, and encompasses all media.  In addition, it focuses on training for its employees and its agency force to ensure that there is consistent representation of its products.

Progressive’s track record now includes $2 billion in Snapshot driven premium and 11 billion recorded passenger miles, which is used to refine the rating algorithms.  Pratt noted that their big data structure will allow for addition of variables in future as experience evolves.

Consumer Rights and Data Portability

I had the privilege of moderating a panel of practitioners discussing impacts of consumer rights and data portability have on  UBI adoption.  Panel members were:

The panel noted that common standardized scoring data will promote efficiency and effectiveness, and can protect privacy of data for consumers as well as propriety of algorithms for insurers.  However, there could be challenging side effects.  For example, as the penetration of UBI expands,  drivers who elect not to utilize telematics based UBI may find that insurers are less interested in the business.  This could result in digital ‘redlining’, if carried to an extreme.

Canadian Content

I was very pleased to see participation at the event by Canadian insurers and Canadian-headquartered suppliers, including IMS, Baseline Telematics, and IMETRIK.  In addition, a number of  participants are actively following developments with the IBAO IBRI initiative.

What do you think?

My sense is that telematics based UBI is now entrenched with the US insurance market, and that this will further encourage Canadian initiatives.  Does this make sense to you?


Mid-Year Update on 2014 Trends

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Before we head off for a good long weekend, we thought we’d celebrate the 2014 mid-point by reflecting on the trends we discerned at the beginning of the year. It looks like we caught a wave or two, and are still waiting when it comes to some others. We’d like your experience: how have your prognostications played out?

Core Systems Replacement – Navigating a Changing Roadmap

It was a no-brainer to suggest that legacy  systems modernization would continue through 2014, since 30%-40% of insurers had started the journey.  We added a caveat:  there would be increased fiscal control placed on large projects.

We think we hit this one.  The journey to modern technology is being guided as much by comptrollers as it is by competitive requirements.  Scope control is the order of the day in many shops.  Unfortunately the original business case, touting ‘business transformation’, may be going through its own transformation, with lowered expectations.

Along the same lines, we found examples of customers doing creative things to maintain existing legacy systems, rather than embarking on long projects which may yield limited results.

Partly Cloudy, with a Chance of Expense Control

We started the year thinking that Cloud was going to be a strategic darling at the dance.  Looks now like the real-life cloud formations are more tactical than strategic.

Although there is a lot of mobile and hybrid software that relies on cloud technology for implementation, the emergence of clouds in insurance has been evolutionary rather than revolutionary.  And the impact has been tactical, rather than strategic.  For a number of organizations, the appeal of the cloud is lower cost, flexible infrastructure, rather than disruptive, innovative technology.

This could change as organizations look to adopt more flexible, on-demand business processes where technology is looked at as a utility, not a strategy.

Marketing Driving Telematics

We think this one was a hit for us as well.  All things equal, the most important impact of telematics-enabled usage based insurance is the variety of data that becomes available for underwriters to use in risk selection and pricing.  However, this assumes that insurers have the technical ability and human expertise to draw the lines between large data sets and profitable business.  Not so easy with legacy systems and limited analytic capabilities.

It also assumes that regulators (and their political masters) have the capacity to accept new methods of underwriting and pricing.  Not always a reasonable assumption, especially with respect to highly regulated products such as personal automobile.

However, there is a large segment of insureds (estimated at 25%-35% of the total personal automobile insurance market) who look towards UBI to validate that they are better than the average drivers, and are willing to sacrifice a bit of personal information for lower prices.

Queue the marketers.  Turns out that many of the folks who are willing to have their behaviour measured actually have better claims history than the average.  And, turns out, that 18-24 year olds will change their behaviour based on feedback that is tied to rewards.

Things Get Smarter and More Talkative

The Internet of Things (IoT) is a relatively new construct that could be more disruptive than all other technologies combined; if for no other reason, it is a combination of all other technologies.

Simply put, the IoT enables machine to machine communications.  If you can put a sensor in something (like a drain) the IoT enables that thing to “talk” to other things (like water pressure measuring devices) which can talk to analytic mechanisms which can discern changes (like “the basement is flooding from sewer backup”).

Or , it can discern changes over time (like the wiring is fraying).  Or….

In other words, preventative measures can be applied in an expedited fashion and risk exposure can be calculated at a significantly finer level of detail.

Insurers will have the opportunity of selecting and pricing risk differently for all manner of exposure, similar to automobile with telematics.  The difference, among other things, is lower levels of regulation.

This, of course, assumes investment in analytic tools and human capital.

How do You See Things in the Mid-Summer Sun?

How do you find the year panning out?  Is the plan going according to plan?  Or did you hit some unexpected roadblocks?  Regardless, it’s good to reflect in the beauty that is Canada in the summer.  And, after all,  there are 6 more months to go…..




Some (Conditionally) Encouraging News for Brokers

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Two recent reports are suggesting that the independent broker channel may have positive prospects, if (big ‘if’) its members can embrace rapidly emerging trends in business and technology.  We’d like your thoughts on this possibility.

The channel needs to change as fast as the consumer …

A recent Swiss Re Sigma report,  “Digital Distribution in Insurance,” sees digital technologies as a two edged sword: “For traditional intermediaries, many of whom fear being squeezed out by direct sales, digital distribution need not lead to channel conflict.  Customers will continue to value the personal attention and expert advice of agents and brokers.”

But this is not a mandate for business as usual.  The report says, “Technology-led shifts in distribution increase transparency, empower customers and lower barriers to entry in some markets.”  The key here is understanding the markets’ needs and desires and designing strategies to meet the needs.

The report suggests a few specifics.  For example, telematics and a shift to more usage based insurance will allow “personalised cover and more risk based pricing” and provide a competitive differentiation for insurers and brokers able to implement this effectively.

The treasure is data, the key is analytics …

The Swiss Re report notes that the increase in digital interaction with consumers facilitates capture of a wide  and deep amount of customer data.  Turning data into actionable  information requires two components:

  1. Analytic tools to allow deep, comprehensive analysis of operational and supplementary data; and
  2. Skilled planners and executives who can translate analysis into insights and actions.

This assumes investment of money and time, but the results can be wins for all concerned,

And J.D. Power provides a case study….

Recent research from J.D Power demonstrates the power of  understanding and exploiting market segmentation, noting that Gen X and Gen Y consumers may be helping to stem the insurance price race to the bottom. However, success with these cohorts requires continually meeting or exceeding current standards for digital marketing.

The  J.D. Power 2014 Insurance Website Evaluation Study found that while price is important in selecting insurance, the younger generations are less likely to select the lowest price brand than Boomers.

According to Jeremy Bowler, senior director of the global insurance practice at J.D. Power, this has important implications for insurance marketers: “Understanding the preferences of different generations, especially Gen Y consumers, is of utmost importance to ensure that shoppers are having the best experience possible,”  he said.

What are those preferences?  Ease of web navigation and attractiveness were key elements.  Gen X and Gen Y shoppers more more likely to select brands with easiest navigation than Boomers and Pre-Boomers.

 So, how is this good news for brokers?

Bowler reinforced the importance of providing information in a manner that consumers can digest quickly.  “The process of getting insurance quotes can be complex for shoppers; and for those unfamiliar with insurance terminology, it can be quite difficult and frustrating,” said Bowler.

This should be red meat for brokers.  Satisfying consumers’ need for simple to understand information is part of the independent channel’s DNA.  The trick is knowing how to present the information to the right prospects in the right way.

What do you think?

There has been lots of discussion about the diminishing market share and opportunities for brokers.  We agree with J.D. Power and Swiss Re that there are tools and techniques that can allow the broker to uncover  and exploit undeserved segments, but it will take work and investment.

Our question to you:  Are Canadian brokers making the investments and taking advantage of opportunities?



“The process of getting insurance quotes can be complex for shoppers; and for those unfamiliar with insurance terminology, it can be quite difficult and frustrating,” said Bowler. – See more at:
“The process of getting insurance quotes can be complex for shoppers; and for those unfamiliar with insurance terminology, it can be quite difficult and frustrating,” said Bowler. – See more at:
“The process of getting insurance quotes can be complex for shoppers; and for those unfamiliar with insurance terminology, it can be quite difficult and frustrating,” said Bowler. – See more at:
“The process of getting insurance quotes can be complex for shoppers; and for those unfamiliar with insurance terminology, it can be quite difficult and frustrating,” said Bowler. – See more at:
“The process of getting insurance quotes can be complex for shoppers; and for those unfamiliar with insurance terminology, it can be quite difficult and frustrating,” said Bowler. – See more at:

What’s the Lifespan of Insuring Telematically?

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Ten Years.

Ten years could be the life span of telematics-enabled, usage-based insurance (UBI), and maybe auto insurance itself, according to one expert on autonomous vehicles, speaking at the  Insurance Telematics Canada 2014 conference in Toronto yesterday.

Several members of the audience were vocally skeptical, but the Oracle of Omaha was quoted, adding some credibility.  Regardless, the debate continues.  We’d be interested in your thoughts.

I’m not an insurance expert, but….

Barrie Kirk is the executive director of the Canadian Automated Vehicles Centre of Excellence (CAVCOE),  Kirk is an engineer by profession and  has extensive experience in the communications and vehicular technologies.  Over the past few years, his focus has been on connected vehicles, autonomous vehicles, automotive infotainment, traveler information services, real-time traffic information, and vehicle use surveys.

Having lunch with him was a crash course in the rapid evolution and commercialization of the previously unthinkable.  His feeling is that self driving cars will be commercially available soon, will result in re-mapping transit plans by 2020, and could have significant impact on automotive insurance requirements by 2024.

(Kirk’s remarks were interrupted several times by audience members who called out “We’ve heard this Jetson story before,” and “These will never work in Canadian winters.”)

But, as Kirk pointed out to the conference audience, he  is not an insurance expert.  He is just looking at the emerging scope of autonomous (driverless) vehicles.   He used Warren Buffet’s comments at the recent Berkshire-Hathaway annual meeting for support.

The Oracle says …

As reported by Chip Cutter on LinkedIn, Buffet said that if self-driving cars “prove successful and reduce accidents dramatically, it will be very good for society and very bad for auto insurers.”

However, Buffet and his long-time partner Charlie Munger are not concerned about this trend at this point.  With respect to self driving cars, Munger cautions:  “I have a feeling that self-driving cars that have a huge impact on the market might take a while.”

Buffet’s prediction was that his automobile insurance asset, Geico, would be doing well for the next 30 years.  And after that?  “I’ll go peacefully without knowing,” he said.

So everything’s good?

Well, maybe … But Kirk is not alone in his thinking.

In 2012, Donald Light, Director of Celent’s Americas P&C Insurance Practice, published a “provocative but plausible scenario in which federal and local government in the US encourage the use of three currently available technologies (telematics, collision avoidance, automated traffic law enforcement) and one emerging technology (robot cars).” It was entitled: The End of Auto Insurance: What Happens When There Are (Almost) No Accidents.  Need we say more?

Our colleague, Catherine Kargas, vice-president MARCON, has written extensively on autonomous vehicles, demographic trends, and stresses on transportation infrastructure, and the combined impacts of these on automobile insurance n Canada. Kargas’ conclusions, and time frames, track those projected by Kirk. (See, e.g., The Evolution of Automobile Insurance).

(Coincidentally, at her presentation at the Insurance 2023 Forum Kargas was greeted with responses from the audience that were similar to the ones that Kirk received.)

The pressure on the insurance business model …

Back in March 2013, Chunka Mui, writing in Forbes, noted that the impact of self-driving and autonomous vehicles will put significant pressure on premiums, and will force tough decisions by insurers on the appropriate business model:

Whether today’s market-leading insurers survive the collision with driverless cars, and perhaps even thrive, will depend on how they manage the transition to an inevitably disruptive future. Certainly, there is a lot of peril. But there are immense opportunities, as well.

Late last year, we posted on comments made by Bill Berkley, chairman and CEO of W.R. Berkley Corporation at a Berkley Canada event. Bill’s view was that the implementation of self-driving vehicle and other risk reduction technologies would continue make the auto insurance product less profitable than other lines. This further supported his companies’ long-term emphasis on specialty lines, rather than general automobile, property, and liability.

Your turn …

So, there is no consensus that autonomous vehicles will destroy automobile insurance nor remove the significance of UBI models. However  insurance analysts, practitioners and investors are seriously looking at the scenarios, and selecting long term strategies.

What do you think?  Drive your point home by making a comment below.


UBI and Brokers: Ticket to Ride or Highway to Hell?

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By all accounts, telematics-enabled usage-based insurance (UBI) is making  steady progress in the Canadian insurance market.  In spite of active leadership by several broker associations, there does not seem to be consensus among front-line brokers as to what role they should, or could, play with new product and service models driven by UBI.

We’re wondering how long brokers can refrain from making some fundamental decisions about this new approach to automobile insurance — and what the consequences will be.

The progress of UBI in Canada…

Over the past year, the number of insurers offering some form of UBI has gone from one (in Quebec) to a handful (with three in Ontario).  This is far from being a groundswell.  However, there are a number of  insurers actively investigating the options,  and telematics suppliers we have spoken with seem genuinely sanguine about prospects.

All in all, analyts suggest that Canada will likely follow an adoption pattern similar to that of the US, which experienced a slow start, but with a fairly quick ramp up now underway, there will likely be a penetration rate of 25%-30% of the personal automobile insurance market in the 2025 time frame.

So where is the broker in this?

At this point, none of the active UBI insurers are broker companies.  However, we are aware of several broker companies that are actively developing programs.  What we are not hearing is a unified chorus of front line brokers singing from the Telematics song book.

Back in October, the Insurance Brokers Association of Ontario announced that it’s subsidiary, the Independent Broker Resources Inc. (IBRI), had entered an partnership with Quindell Portfolio Plc, a leading provider of insurance technology, “to introduce ground-breaking telematics technology to the Canadian marketplace.  The partnership will launch a broker owned telematics solution.”

Much work had been done to ensure that the broker would be in the driver’s seat (pun intended).  The Ontario government issued guidelines that supported the structure and function of the enterprise in data utilization.  Several insurers indicated they were actively considering participation.  It sounded like all the pieces were in place to let the brokers take control of the ride of a lifetime.

Then things went silent.

What’s happening here?

We’ve had a couple of conversations with leaders in the broker community that suggest that the grass roots brokers simply have no awareness of the potential impact of UBI on their business and have no interest in gaining awareness.  Or maybe, they have no cycles left over to invest in gaining awareness.

With a continuing soft market, and increasing demands for growth by insurers, many brokers are stretched beyond any reasonable limit.   For some brokers, long term planning is what crisis to handle after lunch.

Our contacts are quick to point out that they believe an education campaign is in order.  And there are several initiatives underway (ORBiT Education Days will feature a session on Telematics UBI).  But if the students are overwhelmed, can any teacher make an impact?

UBI becomes collateral damage; The enigma becomes a conundrum …

If this is the case, then the broker may be right to give UBI a pass.  Blair Currie, Vice President Marketing, Intelligent Mechatronic Systems Inc., who supplies telematic technology and services, points out that to play in the UBI game, brokers have to keep up with a differences in plans, new regulations, and consumer technology requirements.  (We blogged on some of these elements last September.)  All this for about the same commission that is coming in now.

Unfortunately, if UBI becomes an important alternative for personal automobile insurance, the broker who leaves UBI off the table becomes disadvantaged relative to direct writers or other brokers who have the resources to offer the option.

What do you think?

If you are a broker, are you moving to be prepared to handle UBI?  If so, how much time/energy/money is required?  If not, what do you think this will mean for your personal lines business.

The Internet of Things & Impact on Insurance: A Matter of Give and Take


The Internet of Things (IoT) has entered the mainstream and will impact many parts of our lives.  Insurance will be subject to disruption at levels never seen before.  The IoT will eliminate certain risks (good for insureds, not so good for insurers) but will also introduce new risks and new methods of underwriting existing risks, allowing new coverages and processes.

We will offer some examples. We’d like your thoughts .

IoT and M2M

The Internet of Things (IoT) is the fancy name for Machine to Machine (M2M) communication capabilities.  For example, we have all seen ads for new, ‘smart’  home protection services which will not only set off alarms in the event of break ins, but will also detect changes in temperature (risk of freezing pipe), moisture (floods), as well as allowing the user/homeowner to monitor everything remotely.  This can extend to any number of scenarios in personal and commercial insurance.

Automobiles: From Usage-based Insurance to Usage-controlled No-insurance Needed

Much of the discussion on M2M in insurance has been focused on telematics and usage-based insurance (UBI).  Although the evolution of usage-based insurance is still in its infancy, the road-map for a number of insurers goes  like this:  The machine’s in the car (or in the cell phone) transmit data to a machine at the insurance company which modifies the cost of insurance according to data-driven dynamic rate tables.  The result: ‘good’  drivers will see, the cost decreasing, and ‘bad’ drivers will see costs going up, hopefully incenting them in the ‘good’ direction.

The next evolutionary stage, however, is to take some of the control away from drivers and make all drivers better.   The machine in the car communicates with devices in the road and in other vehicles and takes control of some features, helping to prevent accidents.  Some cars already have control mechanisms which will slow vehicles down or apply brakes if a sudden stop is anticipated ahead.

The logical conclusion to all of this is real disruption:  The Autonomous Vehicle will use interactions with sensors and vehicles to  completely control the  vehicle.  On this basis, many believe that accidents will be prevented almost entirely, pushing the cost of insurance down dramatically, or shifting the responsibility from the driver to the vehicle itself, where insurance protection will be in the hands of the vehicle OEMs.  (Our colleague, Cathereine Kargas,  first introduced this to us in a post in this space. last August.)

For insurers, this is not good news.  Lower (or no) premiums in automobile mean that there will be more capacity in other segments.  This could cause further softening of rates, lower profits, and unhappy shareholders.

IoT to the Rescue

This is where technology gives back by increasing risk elements, allowing insurers to offer cover that was not available before.  In a recent article in Insurance & Technology, John Sarich, vice president of strategy at VUE Software, cites a number of examples.

For example, crop insurance is “a little arcane when compared to other lines of insurance” as “it is difficult to monitor a farmer’s activities in relation to crop insurance guidelines and requirements.”  However, by introducing sensors in the field that would accurately track activity (rainfall, number of acres planted, fertilizer used, etc.), there is greater precision and opportunities to offer products which better serve the insured and insurer.

Sarich cites construction equipment as another area where M2M can add value:

Insurance companies that insure construction and other heavy equipment can use the same technology described above for farming, to track construction equipment 24/7. For example, a road grader that is moving at 3am is likely in the process of being stolen. On the other hand, the contractor is able to track the exact number of hours that equipment is operating that becomes the basis of an audit trail for tracking construction costs as well as insurance exposure.

And there’s more…What do you think?

We are at the very early stages of IoT.  Sarich says “the use cases for insurance will only be limited by the imagination of technologists and insurance managers.”

We’d like you to use your imagination:  Where do you se IoT going next?  What will be the ultimate conclusion?



What Happens When Consumers Know More Than We Do?

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A colleague of ours was recently bemoaning the lack of interest that insurers and brokers are taking in new developments such as social and usage-based insurance.  Our friend suggested that without a working knowledge of operational tools, such as social media, and technologies such as  telematics, we’re falling behind our customers and won’t be able to compete.

The reality is that the consumers may know more than we do about communications technology already, and may be catching up on insurance knowledge as well.

So our question is:  What happens then the consumers know more than we do, but still have to rely on us for the final purchase.  We’d be interested in your thoughts.

The consumer sets the pace

Marketers everywhere have learned that consumers’ expectations have changed radically due to digital sophistication.

According to a recent report by eMarketer, “The rapid emergence of the everywhere, always-connected consumer places new demands on marketers.”

Turnaround time is a critical factor.  According to eMarketer,  in responding to requests for information or supplying products and services, “Gone are the days of 24- or 48-hour response times. Consumers expect instant interactions, whether it is a relevant offer or an answer to a customer service query, and the ability for same-day delivery of items purchased through digital channels.”

What does this mean for insurance?

In a recent blog, Forrester’s Ellen Carney  suggests that digital will disrupt the relationship that insurers/brokers typically have with policy holders:

Once upon a time, insurers sat in the power seat when it came to their interactions with policyholders.  The insurers understood the magic behind how insurance was sold, how premiums were calculated, and how claims were adjudicated. Those days are gone. In the Age Of The Customer, consumers are changing the rules and who wield the power. Thanks to all things digital, consumers have shifted from being passive sideliners and are willing — and able — to play more active and demanding roles across the insurance business.

The service cycle for insurance has to meet consumers’ expectations, not only for timeliness, and communication channel of choice, but with regard to information transparency.

Consumers get engaged with details…

Digital natives are comfortable with complex concepts that underpin search algorithms and crowd-sourced capital financing.  As insurers introduce approaches such as usage-based insurance, underwriters and distributors can expect a client/prospect base who may know as much or more than they do about the actual workings of these products.  Consumers have shown interest in understanding how our products work and leading insurers are using this information to increase customer engagement.

A key here will be transparency, and ease of access.  Annual renewals will seem like an eternity to clients who can get daily,  hourly, or instant feedback on other activities.  Feedback and price/product adjustments must fit the needs and timetables of the new consumers.

If we can’t do this, others may be positioned to do so.  Carney writes that insurers who are not plugged in are “threatened by an ecosystem of adjacent players like car manufacturers, utility companies, telecom firms, and sensor and wearables manufacturers, whose utility and access to consumer data has placed them dangerously close to the core of insurance.”

What do you think?

Are you seeing the  impact of the new consumer from your wheelhouse?  Is she bringing her expectations from other industries?  Is our industry  ready to handle the new generation of consumers? Are you?

Drop a comment below.




AXA: Just a One-Bullet Digital Insurer? (We Think Not)


Recently, our friend Denise Garth from SMA posted a blog on a ‘game-changing’ announcement:  AXA France and Facebook entering into a strategic partnership.  This post has quickly made the rounds and caused the count of exclamation marks in emails and tweets to increase geometrically, as other insurers try to absorb the implications of  a global insurer working so closely with the 500-kilo gorilla of social media.

With all due respect, we’d like to suggest that this should not surprise anyone who follows the progression of digital in insurance generally and AXA specifically. The Facebook agreement is another element in continuing progress that a few insurers, including AXA, are making to integrate fully with the digital world.  In so doing, these insurers are steadily transforming how they do business, and, in some instances, transforming the business itself.

We’d like your thoughts on this announcement and what it means for us all.

What is in and out of the AXA-Facebook partnership?

First, we need to note that the exact dimensions of AXA’s partnership with Facebook are not clear.  AXA’s release says that the insurer will access “dedicated Facebook resources, notably including innovation & analytics teams to help in further developing its brand presence on Facebook, particularly on mobile”.  In addition, Facebook  will “analyze the impact of AXA’s communication campaigns on this social network, and its experts will train AXA’s marketing and digital teams.”

According to Hugh Terry, editor of The Digital Insurer and a Director of Insight Consulting, there are some caveats and known unknowns.   Blogging on The Digital Insurer, Terry goes beyond the hype, noting:

  1. It is not an exclusive arrangement – just the first “international insurer”. Perhaps US insurers have similar tie-ups already?
  2. It is not a distribution arrangement – Facebook are not tying up with AXA to sell insurance
  3. It looks like a commercial arrangement whereby AXA pays to access the skills and knowledge of Facebook  analytics and innovation experts in the mobile field. The size of that team is not disclosed
  4. It appears to be centred on France – as the Facebook quote is from the CEO of Facebook in France. Tellingly there is no Facebook press release

That said, this should not be seen as busienss as usual.

AXA has been an active digital citizen…

AXA is no stranger to digital activities.

In a 2013 video, AXA France CEO, Nicolas Moreau describes how they have used to transform they way they connect with customers and prospects across a variety of channels.  “Today, people expect direct access to their insurance provider, moving from a linear, intermediated relationship to a harmonious, connected conversation involving the company, customer, and agency,” Moreau said.

In addition, AXA France has leveraged its social network skills to create  a community of small business owners, which “allows them to interact with each other and with insurance specialists, sharing content, advice, and answers to each other’s questions, ” Moreau notes.

Moreau says the the value for AXA France is that it “promotes our brand, builds customer loyalty, and transforms the way we connect with customers….which is huge.”

It’s not the media, but the message…

We don’t think that the measure for insurers is how much digital they are doing, but how well it is impacting their business.  Back in November 2013, we noted an EY report which found that two thirds of insurers surveyed had had quick wins with digital initiatives, but only 10% of respondents were realizing transformational change as a result of digital initiatives.

During a keynote presentation at the Technology Conference 2014, Michel Laurin, president of Industrial Alliance Auto and Home Insurance, discussed the role of digital engagement in his company’s Mobiliz Usage-based Insurance (UBI) offering.  In a weekly email to individual clients, Mobilz presents the driver’s own behavioural results for speeding, hard braking, etc. and comparison of the results with the balance of the “community”.   The intention is to create competition for improvement.

We see parallels here with AXA’s strategy of continuous innovation.  It is not social (or UBI, or any other technology) that is the objective.  Rather, it is the intelligent utilization, resulting in improved customer engagement and profitable growth for the insurer.

What do you think?

We’d like your thoughts.  Is the AXA announcement causing buzz in your organization?  Is that buzz likely to stimulate activity? Do you think it should?

Changing Driver Behaviour – Can UBI Deliver?

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Clearly audible amid the buzz surrounding UBI in Canada is the expectation that it will be effective in changing driver behaviour, i.e., it will help drivers improve their skills. This is exciting because a corollary of improved skill is reduced loss costs making changing driver behaviour an important selling point for insurers contemplating a push into UBI.

During a recent webinar a case was presented that examined data collected from three drivers whose performance was nominally similar but whose skills, on closer examination, differed considerably. The key takeaway being that the granularity of telematics data and the application of powerful analytical tools make it possible to identify these differences and leverage them to predict losses and properly price risk.

Research has consistently shown that when presented with the concept of UBI and the idea that adopting it could yield them a monetary benefit with no downside risk, many drivers express interest in the product. Interest is typically reported as ranging from one to two thirds of respondents with the top third very interested and the bottom third not at all. Half or more of those drivers who are very interested in UBI are also reported to be willing to change their behaviour.

Putting the Brakes on Expectations

The apparent alignment between what the technology can deliver and emerging consumer acceptance, even preference, seems very promising. But, perhaps there’s cause for gentle application of the brakes on the ‘changing driver behaviour’ bandwagon, at least with respect to programs that seek to attract the soft target of cautious, identifiably low-risk, drivers. There are a number of reasons this might be prudent.

  • Progressive Insurance first offered a UBI product in 1999 and has gathered data from more than one million cars and over nine billion miles, or fourteen and a half billion kilometres, of driving. It now captures only six months of data from its Snapshot policyholders before a renewal discount is set. Why has the company with the most experience gathering and analyzing multi-dimensional UBI data chosen to limit the number of data points it uses to assess policyholders’ driving performance? Could it be that Progressive has learned that driver behaviour doesn’t change much over time?
  •  Most new UBI programs target good drivers whose driving habits are likely to yield a discount for the policyholder. This subset of drivers is not a representative sample of the whole driving population and so the models of good driving behaviour likely suffer from sample bias. Will this approach lead to a comprehensive understanding of driver behaviour and what is needed to modify that behaviour?
  •  Behaviour change is probably best achieved with strong incentives, intense and frequent engagement, and immediacy in terms of realizing the promised benefits. Industrial Alliance’s Mobiliz is a good example. Can other programs, designed around casual engagement, periodic contact, and once-yearly realization of benefits, precipitate meaningful changes in behaviour?

UBI is in its infancy in Canada and much remains to be learned. Improving driver skill and road safety generally are laudable goals but perhaps for now should be treated as peripheral benefits rather than as program objectives or key selling points. UBI has massive potential to reshape the auto insurance landscape but it needs broad application to do so and narrowly delivering its benefit to an already low-risk group under the guise of improving driver behaviour will not adequately leverage its potential.

For a more in-depth examination of the topic, go to and download Corner Two Consulting’s white paper, Changing Driver Behaviour – Can UBI Deliver?


Colin Wright ( is a proponent of UBI and Principal of Corner Two Consulting, which focuses on UBI preparedness. Colin has extensive experience in financial services, including managing business analytics units for two leading insurers and managing Aviva Canada’s Autograph UBI pilot from 2008 to 2010. He holds an MBA from York University’s Schulich School of Business.

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