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Will Canada Develop Its Own UBI Path?

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A number of indicators are suggesting that telematics-enabled usage-based insurance is not getting traction as quickly as some expected. However, leading Canadian telematics suppliers are actively working with insurers and brokers to develop value-added and niche products which will improve the uptake, and perhaps create a uniquely Canadian UBI profile.

The US trend might not be our friend

A December 2014 survey of 1,001 American adults by InsuranceQuotes.com found that 51% of respondents would not enroll in a Pay As You Drive (PAYD) program.

Moreover, awareness seems to be dropping.  The same survey found that a lower percentage of respondents were aware of PAYD insurance in the 2014 study than in the 2013 study.

This in spite of heavy rotation of ads from the likes of Progressive in the US.

There are bends in the trends, but …

Common wisdom says that the reluctance comes from concerns about privacy.  In the same InsuranceQuotes article Mike Barry, from the Insurance Information Institute (III) says, “I think there’s still reluctance on the part of some drivers to have a GPS device installed in their cars that’s monitoring their driving habits.”

But,as we have noted elsewhere, privacy may be as much a bargaining chip as a firm principle.  An accompanying InsuranceQuotes.com article notes that the acceptance level of UBI increases when discount rise to 25%.

Younger demographics have less concern about privacy.   Barry says, “I think millennials are more open to different ways of being rated as drivers, whereas someone who is middle-aged or older may be set in his ways when it comes to auto insurance.”

But as our friend Catherine Kargas has pointed out, millennials are leading the way away from personally owned vehicles.

Canadian suppliers are extending expertise through the distribution channel …

It’s clear that just having UBI programs is not enough.  Insurers are taking to customized offerings to address segments.  The 2015 Insurance-Canada.ca Technology Conference, will be featuring two of the best.

Some brokers are becoming familiar with telematics UBI products.  Other brokers are becoming experts and developing their own products.  An example of the latter is InsureMy.com, a subsidiary of Alberta and Ontario based brokerage Godfrey-Morrow.

Hugh McTavish, principal of Godfrey-Morrow established a relationship with supplier Intelligent Mechatronic Systems (IMS).  The result was InsureMy.ca, which provides insurance products enhanced by technologies, including telematics.

The first innovation was introduction of Time-Based Insurance (TBI), initially delivered for commercial fleets.  McTavish’ purpose with InsureMy is not to use technology for its own sake, but to help make the insuranc product more transparent for customer.

 … And are developing value add beyond basic UBI

Quindell Solutions is helping  insurers and brokers introduce value-add solutions as part of a UBI offering.  In addition to collecting information on driving habits, Quindell technology can monitor and report on the health of the vehicle.

Quindell is also active in developing telematics driven dashboards to assist drivers understand and improve their driving behavior.

Is Canada paving its own road with Telematics UBI?

IMS and Quindell will be featured at the 2015 Insurance-Canada.ca Technology Conference, March 9-10, 2015 in Toronto.  Each will be hosting a session to articulate its role with various offerings and visions for the future.

If you are interested in values beyond generic UBI, this will be the place to discuss with expert developers and users.  And we’d like your opinion:  Are Canadian suppliers, distributors and user creating a unique UBI path?

 

 

 

One Comment

Blair Currie

There are a few barriers that the Canadian insurance market needs to overcome before telematics becomes more mainstream. These include regulation and overall industry profitability. Currently only 3 provinces – Quebec, Ontario and Saskatchewan – really allow telematics so it is not a national issue yet. Further, Ontario auto has a number of hurdles to overcome – not the least of which is profitability which is under strain by mandated rate reductions. There are currently about a dozen telematics programs approved and/or underway in Canada so this is pretty good progress considering the landscape. Adoption of telematics is somewhat slow but less so that the roll-outs in the United States which are not hitting their tipping points. We think that Canada will roll faster – on a per capita basis – that the iUS. And with the mobile and embedded solutions that are now coming to market, this process will accelerate.

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