We had an interesting discussion recently with a senior IT executive from a top 10 Canadian P&C insurer on trends. His feeling was that Telematics, the technology that allows driving behaviour to be recorded, uploaded to carriers, and analyzed, was among the top new technologies to watch. His organization was just starting to investigate it, but planned on putting enough resources behind the work to ensure the organization would not be left behind.
His final point was the most interesting: He believes that the payoff for implementation was potentially great in a number of areas: pricing, risk selection, risk management, portfolio underwriting, etc., but that it would take a full two years to even begin to see positive ROI because it would take that long to distill information from the plethora of data being made available (as compared with the relatively simple rating routines we have now with the limited set of data we capture).
Readers of this blog will recall that we have devoted a fair amount of space to location-based information generally (see recent note on Location, Location, Location) and Telematics specifically (e.g., implementation options with vendors, uses in commercial fleets risk management, analytic advantages).
To follow up on our friend’s comment about timing, though, we looked back to an article in Insurance & Technology in August 2010 on Progressive’s relaunch of its Telematics initiatives after a less than successful start in 2008 (remember the 2 year horizon our executive mentioned). At the time of the article, the program was renamed to ‘Snapshot’, made easier to use, and came with a marketing programme designed to alleviate concerns about ‘big brother’ watching.
Fast forward nine months, and we now find ‘Flo’ (Progressive’s ever-ebullient pitch lady) touting the cute little device that captures the data on You Tube. Flo cheerfully assures us that it can’t raise our rates and doesn’t care about how fast we drive. “The only thing it cares about is saving you money.” (Well, maybe they care about a few other little things as well, but never mind.)
The video has had 34,000 + views since it was uploaded about 6 weeks ago. Review comments are mixed. Some find it intrusive, but others are attracted by the discount potential and believe that everyone is tracked anyway.
Regardless, it looks like Progressive has passed the 2 year waiting period, and is putting this forward in a big way.
Flo closes her video by saying to her clients, and maybe to her competitors: “Later, Gators.”