- Where Insurance & Technology Meet

Telematics, Customer Engagement, and UBI: Two out of Three Ain’t Bad

We’ve been getting the sense that UBI (Usage Based Insurance) is not getting the traction that many of us felt it would when it was re-introduced to the Canadian market a few years back.  However, the investment in Telematics might be a key to customer engagement, even without reliance on premium discounts, or insurance at all.  We’d like your thoughts on this.

UBI Progress in Canada – not yet in high gear….

There are roughly a dozen insurers in Canada deploying telematics-based UBI programs, the most recent announcement coming from RSA Canada.  Rowan Saunders, RSA Canada’s president and CEO noted that the technology and the experience from other RSA organizations worldwide, would allow greater precision in pricing models, which would improve its competitive positioning.

This stands in a bit of contrast with some other Canadian companies’ introductions which had more direct consumer focus (we’re thinking of Desjardins, Industrial Alliance, etc.).  Of course, RSA being a broker distribution company and this being a preliminary announcement, there are other variables at play as well.

Regardless, the consensus among suppliers, insurance carriers, and brokers is that personal lines consumer uptake is slower than expected to this point.

Being fleet can be awarding….

While most of the ink spilled on this topic has focused on personal lines auto, there have been real progress in other areas.

Fleet managers and insurers have had a love/hate relationship.  The former attempt to rate large numbers of vehicles as efficiently as possible, meaning they never could get accurate usage information.  The fleet managers complain, but have little recourse.  Meanwhile, these same fleet managers have to use second hand data to manage efficiency in the utilization, of vehicles.

Telematics is proving to be a an elegant solution for both camps.  The fleet managers utilize on-board devices which monitor the usage of the vehicle and the behavior of the driver.  These can be used to improve the operational aspects, using real data, to lower rates and improve operation expense ratios.

Brokers are taking to this.  The broker owned Independent Broker Resources Inc. recently launched ‘fleetadvisor’, using technology by Quindell.  IBRI recently received the first runner up Technology Award (ICTA) for this initiative.

And fleets can save money while standing still …

As we noted in an earlier post, InsureMy, a broker based in Alberta and Ontario, developed a ‘Time-based’ insurance product, using telematics devices to determine when vehicles are standing idle (snow plows in the summer, e.g.).

Using technology from IMS, this has allowed frictionless calculation of idle time, which underwriters can discount.  Vehicle usage, and non-usage, are automatically reported, minimizing redundant recording and reporting.

Value add products for drivers

CAA insurance has introduce telematics for personal vehicles.  Blended with this is enhanced servicing capabilities by the Automobile Association portion of the business.  Using the same devices used to track usage, CAA can offer improved service in the case of breakdown,using data transmitted from the vehicle.  In some cases, the fix to the vehicle can be provided remotely.

Tail wags dog….

The interesting element common to all these examples is that Telematics is a multi-trick pony that offers engagement on a number of fronts.  So far, wide spread adoption of telematics for consumer rating has a ways to go.  But in the meantime, we are seeing innovative applications of the technology which are being taken up by insureds.

We wonder if there is a larger message here.  We know that there is a challenge to get consumers (personal and commercial) excited about insurance.  However, by being creative, these same consumers will be relying on the vehicular technology for value add services, blended with the insurance program.

What do you think?

If insurance could blend into the background, and attractive product offerings come with the insurance blended in, would we see a different model emerging?