- Where Insurance & Technology Meet

Telematics: Thinking Beyond Discounts

Telematics insurance announcements continue for Canada.  Up to this point, the enticement for drivers has been price.  However, there are indicators that price efficiency is only a start for customer engagement with Usage-Based Insurance (UBI) programs.

The Technology Conference will provide a forum for examining alternative approaches.  In a run up to that, we are looking for your input.

Mandated discounting for Ontario automobile insurance stimulates UBI

Last year, the Government of Ontario mandated reduction of automobile insurance premiums by 15%.  For some insurers, use of UBI was part of a response.

Intact Financial had announced the launch of a telematics program in Quebec last fall for its Intact Insurance and belairdirect brands.  As reported in, Intact Financial is moving this program to Ontario in April, which will assist it in meeting the premium reduction goals, focusing on “discounts to safe drivers.”

Driving safe-driving behaviour with instant feedback

Safe drivers can be defined in traditional methods, such as miles driven to work and number of tickets representing driving infractions.  Telematics can monitor these  and other criteria more effectively than through the traditional self-reporting.

Progressive Insurance – which is regarded by many as the leader in implementing Telematics-based insurance in the US – uses this model.  The insurer installs  devices for a prescribed period, during which it captures enough data on speed, hard braking, distance, and time of day.   From these data, Progressive determines the appropriate rating for the car and driver, and removes the device.  Premiums going forward reflect this rating.

Some insurers are taking a different stance, using the telematics devices to dynamically change rating/premium based on current driving behaviour.  We have posted on a few  examples of this approach, including UK based ingenie and Mobiliz, from Industrial Alliance in Quebec.  Both programs target young drivers, rewarding safe driving with lower premiums on a monthly basis.

Beyond premiums

Telematics devices, as a location based tool, lends itself to a number of ancillary services.  The most obvious are on site automobile services, including battery charging, flat tire changes, keys locked in car.  The organization best known for these services is planning to leverage its position.

Last September, CAA South Central Ontario announced that it would be implementing Telematics to serve its members for automobile assistance and its insureds with a planned launch is coming in first half of this year.  It looks like a win-win-win opportunity for CAA, CAA Insurance, and CAA’s members.

Cindy Hillaby, Vice President, Membership and Automotive Services at CAA SCO noted, “Our promise to our members is to provide them with roadside safety, peace of mind and value for their membership. Telematics provides us with new opportunities to use technology to deliver on that promise more effectively while providing members with an extra level of care and convenience.”

On the insurance front, Matthew Turack, Vice President, Insurance for CAA SCO said, “Our planned telematics offering will enhance CAA auto insurance offers, bring fairness to insurance, reward better driving behaviour, and lead to safer roads.”

 Many Telematics flowers blooming at #ICTC2014

ICTC-wheel-plain-r60The Technology Conference 2014 will provide required background on Telematics generally and will do some deep dives into the directions different insurers and telematics suppliers are taking. Check out a sample of the telematics stream. We also have Michel Laurin, president of Industrial Alliance Auto and Home Insurance, as one of our keynote speakers, addressing the topic of Technology Enabling Transformation.

What do you think?

We’re interested in your thoughts about the present and future of Telematics-UBI  in Canada.  We always welcome your comments below.  In addition, there is a survey underway to gather information for release at the conference and publication on the site (and likely comment in this space).

One Comment

Blair Currie

Insofar as telematics can be considered a B2B2C business (Telematics services provider to Insurance carrier to Policyholder), there are a number of perspectives and benefits that come into play with a telematics program.

For insurance carriers, there are both hard and soft reasons for adopting telematics. The hard (business) reasons include Claims reduction, Attracting good new drivers, Increasingly loyalty among current drivers (and especially the top drivers within the book of business)and Selling value added services.

The softer (less tangible reasons) for adopting telematics include increasing the “Service” level of insurance through CRM measures and sharing data and arguably most important the positive impact on society. Young drivers and Mature drivers programs can save lives, keep our roads safer and reduce environmental impact.

IMS has a calculator to help insurers determine the potential benefits and establish the business case with hard measures, when determining how to proceed with an insurance telematics program.

For the policyholder there is the rationale appeal of lower priced insurance – both from the initial discount, but also potentially the discounts for good driving behavior. There’s also the satisfaction of taking more control over your destiny when it comes to insurance. But the policyholder can also derive significant emotional benefits of safety and security for their family. Motor vehicles are a leading cause of death among young drivers and using telematics to save lives is a strong reason to consider an insurance telematics. Similar the security of telematics enabled roadside assistance for older drivers has significant appeal both for the older driver and the guardian.

So the telematics story is a rich one and surely more compelling than just a price proposition alone.

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