- Where Insurance & Technology Meet

Telematics/UBI and Driverless Vehicles: Is There a Battle Royale Forming?

There is an interesting debate involving a couple of possibly competing trends: one is the use of Telematics to support Usage-Based Insurance (UBI); the other is the emergence of Driverless Vehicles.  We think that some of the discussions might be muddling some issues — and, regardless of the outcome, we think there are some clear winners already.  We’d love to know what you think about all this.

In One Corner: Telematics/UBI Initiatives …

We have written on how Telematics enabled UBI has taken hold in some geographies around the world, and wondered what was missing in Canada.  There does seem to be traction by some insurers in Canada (the most recent being the heavily marketed Ajusto programme from Desjardins), which, a recent poll suggests, could to play itself out with more announcements through 2013 and 2014.

There is even discussion about a broker driven programme on behalf of select insurers.

And In the Other Corner: Driverless Vehicles ….

Automobile technology has matured to the point where organizations as divergent as auto manufacturers and Google are actively developing autonomous (driverless) vehicles.  As our Insurance 2023 colleague, Catherine Kargas, VP At MARCON, has noted in an excellent report on the future of automobile insurance, autonomous vehicles are part of a larger trend which will reduce the demand for automobile insurance (perhaps up to 80%) as we know it.

In addition to determining whether this will occur is another important question:  How long will it take?

So, What’s the Competition….

Getting into the Telematics UBI game is a non-trivial, potentially expensive exercise for insurers.  Net new systems have to be acquired, old (even new) systems need to be re-configured.  New expertise needs to be found and brought in.  If the insurer believes that automobile insurance market could be reduced significantly, the business case for UBI could be further challenged.

However, an insurer might see that developing the expertise in using UBI information allows them to capture a high proportion of the current market share and positions the organization to compete for insurance and services revenue as the autonomous vehicle trend expands.  On that basis,  UBI has a long-term strategic value.

And the Winners Are …. 

We don’t know where this will all end, but we do think there are clear winners now:

  • Telematics suppliers.  There is clearly a market for this technology and for the expertise they bring.
  • Data Analysts.  We have written about the critical need for the industry to develop skills in data analysis well beyond the current norm.  Either option above will test those skills.
  • Brokers.  Either way the competition goes, there will be confusion in the consumer market.  What’s covered, what’s not? What other products (umbrella) can be used?  Trained intermediaries are uniquely positioned to address these important questions.
  • Insurers and brokers who are thinking about the issues and opportunities, and actively evaluating strategies now.  This looks to be both complicated and important.

Ladies and Gentlemen, Place Your Bets …

We’d love to know what you think about this.  Are these issues resonating with you?  Are these competing trends, or will they come together in a Kumbaya moment?  Will UBI get enough traction to become a common feature, or will insurers hold off,  waiting for more information?  Is the driverless vehicle as disruptive as some of the information suggests?

Leave your comments below. And, set your own odds, if you wish.


Blair Currie

Interesating discussion.


Telematics and “Driverless vehicles” can also be viewed as part of the same trend, and that’s related to using data to help make drivers smarter, safer and greener while behind the wheel of the vehicle.

As a technology company, we see both Telematics and Driverless Vehicles to be based on digital technology that will likely converge; so the issue may not be one technology or another, but both technologies working together. Then the question arises what order will they appear.

Telematics will likely come faster to market because the technology is already established and is becoming affordable. It’s been in market for 15 years now and the numbers of vehicle in North America now number in the millions – perhaps 3-5% of the total market of 300 million vehicles in Canada and the United States.

In contrast there are only a few driverless vehicles available, and while there are exciting developments today, as well as forward looking Auto OEM announcements, there are miles to go before this technology will be broadly available.

As such, Telematics will probably serve as a basic form of Driverless cars and additional functionality will build on the telematics systems of today’s vehicles.


Regarding the winner and loser discussion, I think that consumers will be the ultimate winners because technology will reduce the number of human-related accidents. In time this decrease in accidents will result in lower insurance premiums but also lower claims. This technology will also help vehicles conform to drivers (vs. the other way around) by making adjustments for each person behind the wheel e.g., seat positions, mirrors, temperature settings, access to their “Personal Clouds” for information and entertainment while on the road.

Other thoughts on this subject are:

Telematics Service providers – as a Technology company, we will do our best to keep ahead of the trend and provide the foundation to make this possible. Hopefully this will help us win.

– Brokers will probably divide over the issue of technology with some gaining a real advantage by getting ahead of the curve.

– Data analytics companies will do well both to service the insurance carriers now and in the future when standards are in place, data becomes more portable, and consumers are able to shop around their data from insurance carrier to insurance carrier. This “Bring your own data” (another form of “BYOD”) will be an opportunity for brokers.

– Business process consultants will also win as this topic gains traction with top automotive OEMs and Insurance carriers. But these players will likely need to align with players who have direct experience with the technology.


While we may use the term “Driverless cars” these vehicles are not really driverless. There will always be some form of driver engagement, so we need to be careful with this term. Insofar as a driver is involved there will be human judgment involved so mistakes can happen. While insurance liability will decrease it will not disappear.

So in the end UBI will be disruptive and will be part of a greater movement to “Connected cars” that will include Driverless vehicles.

Blair Currie

One additional thought is that Automotive OEMs will be increasingly drawn into Auto insurance. As automobile manufacturers add more safety features to their vehilces, they inherently take on more risk.

Many automotive OEMs are already “Banks” through their financing arms e.g., GMAC. With this in mind it’s a reasonable step for a Bank to become and Insurance company with the automotive players getting into auto insurance.

This is possible what Ford was thinking when it started to work with StateFarm in the United States.

While automotive OEMs have not moved strongly into the “service” space beyond service to their vehilces, it’s likely they will build their vehilces to become more platforms for services including insurance. So they could be “winners” in this space as well.

Catherine Kargas

I think we need to clarify the term DRIVERLESS. In the short term, there will be semi-autonomous vehicles, ie vehicles with increasingly autonomous features (see Mercedes 2014 S class, see Cadillac super cruise, …). In these semi-autonomous vehicles, driver engagement, although reduced, will be required. However, driverless is where the technology is headed and by driverless, we mean exactly that: the driver is not required to intervene. In fact, future models of these vehicles are presented without steering wheels.

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