Automotive Insurance Telematics Outlook Europe And North … · 2018-07-28 · 2 Agenda Telematics-based Insurance - Overview 3 Insurer UBI Strategy Comparative Analysis 4 Existing

Automotive Insurance Telematics Outlook – Europe And North America

May 2013

Niranjan Manohar, Industry Analyst Frost  &  Sullivan’s  Automotive  &  Transportation

Research Group

2

Agenda

Telematics-based Insurance - Overview 3

Insurer UBI Strategy Comparative Analysis 4

Existing UBI Value Chain 6

What's the Market Like – UBI Market Snapshot 7

Regional Analysis of European UBI Market 8

OEM’s  Involvement  in  UBI   9

Examples of OEM Involvement in UBI 10

Wireless Provider as UBI Solution Provider 12

Expected Future UBI Value Chain 13

Partner Ecosystem Highlights - Examples 14

Conclusion 15

Frost & Sullivan Contact Information 16

3

Telematics-based Insurance - Overview Driver behavior analysis is the key type of telematics-insurance solution OEMs, especially, are keenly looking into – reaching out to specific age buyers & keeping costs down

PHYD+Miles = 2 Step Insurance Discount, current TREND

Complete third party support for OEMs

Ability to reach out to first-time buyers

Rating algorithms key – real-time data

Privacy  laws  don’t  affect  if  no  GPS

PHYD Driver Behavior Mileage-based PAYD+Crash

Management

PAYD Combination of

Miles+PHYD

Telematics Insurance

Single Step Flat Discount

Single Step Multi-level Discount

2 Step Multi-Level

Discount

2 Step Discount+ Crash Analysis

4

Insurer UBI Strategy Comparative Analysis (North America & Europe) In most cases hardware is owned by the insurance company (sometimes rented by hardware provider to insurer), installation cost is non-existent

Parameters

Name of UBI Program Snapshot On-Board Advisor Insurethebox Coverbox

Commercial Launch Date 2010 2010 2010 2009

Type of UBI Miles, When & How Pay How You Drive Miles Miles, Where & When

Current Geographic Presence 43 States 23 States UK Only UK & Northern

Ireland

Future Geographic Expansion

AK, CA, HI, IN, NC, TN and WA

Expansion to other states Pan Europe No expansion

OEM / Aftermarket Fitment Aftermarket Aftermarket Aftermarket Aftermarket

Discounts <=30% >=15% Flat Discount Flat Discount

Patent Issues NA NO NO NO

Trial Periods Term Basis – 6 Months 2 Years None 14 Days

Cancellation Fee None None $100-120 $30-160 (post 14 days)

Source: Frost & Sullivan

5

Insurer UBI Strategy Comparative Analysis (North America & Europe) In addition to basic insurance features, insurance companies are packaging additional features, such as vehicle tracking and 911

Parameters

Stolen Vehicle Tracking

eCall / 911

Crash Management

Fleet Management

GPS Tracking

UBI Target Users All ages

Drivers of commercial fleets (Class 1 to 8) and Teens

All ages More useful to teens

Experienced and young drivers (<23 years)

Source: Frost & Sullivan

6

Existing UBI Value Chain The current UBI market is controlled and driven by insurance companies with the services being leased/rented to TSP’s  of  the insured on policy contract basis

Insurer Insured

Telematics Service Provider (TSP)

Web access with details about their

driving if contract is with the TSP

Self Installation of telematics hardware (for example device connects to the

OBDII port – no professional installation)

Installs the telematics hardware through an

installer ( depending on insurance provider)

Provides motor insurance cover based on UBI

programme

GSM Communication Operator Map Supplier Hardware Installer Billing

Engine Database

Management Assistance Operators

Hardware Supplier

Insurer TSP: Pays monthly telematics

package (dependent on basis of contract for

all the services)

TSP Insured: UBI telematics solutions based on contract

Shows the Business Value Chain when the TSP acts as the solutions provider when services are leased to them by insurance companies

Shows the business value chain when the insurer becomes the solution provider while undertaking services from the TSPs on a contractual basis

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0

3

6

9

12

15

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2012 2013 2014 2015 2016 2017 2018 2019 2020

UBI

Sub

scrib

ers

(Mill

ions

)

UBI Subscribers NA UBI Subscribers EU

What's the Market Like – UBI Market Snapshot (North America and Europe) With all the commercial UBI programs underway and as consumers become more aware of UBI benefits, installed base is expected to increase post 2016

UBI Market Snapshot : Subscriber Base for UBI (Europe and North America) 2012 - 2020

• Expected foray of newer UBI offerings from insurers along with OEMs (e.g. In North America StateFarm and Ford SYNC; Vauxhall and Ingenie) meeting wide fragmented regulatory needs.

• Increase in UBI uptake expected from increased delivery of value proposition through media and agent channels explaining end user involvement and associated metrics

Note: All figures are rounded; the base year is 2012. Source: Frost & Sullivan

8

Regional Analysis of European UBI Market – Subscriber Forecast Increasing expectations from the consumers side but OEMs realization of killer connected car components is slow and the business model is still weak

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1.5

2.0

2.5

3.0

3.5

2012 2020

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2.0

4.0

6.0

8.0

10.0

2012 2020

Uni

ts (M

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2.0

2.5

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2012 2020

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0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

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German market is expected to grow from ~ 50,000 in 2012 subscribers to

~ 2.7 Million by 2020

France market is expected to grow from ~ 150,000 in 2012 subscribers

to ~ 3.1 Million by 2020

Italian market is expected to grow from ~ 1.5 Million in 2012

subscribers to ~ 9.7 Million by 2020

UK market is expected to grow from ~ 350,000 in 2012 subscribers to ~ 7.2

Million by 2020

9

OEMs Involvement in UBI - Keen in Offering UBI Solutions OEMs are starting to embed the UBI functionality in their connected car device; Fiat, VW and Ford Europe are joining the race.

OEM Insurance company TSP

Direct Line Group

--

Type of Solution

Expected ?

10

Example of OEM Involvement in UBI – Citroen’s  Pure  PHYD  Program Teletrac’s platform is used to evaluate driving behavior, customers can get 12 months of free insurance as a trial based on driving analysis

Citroën’s  C1  Connexion Citroen and Teletrac will provide a free standard fit telematics based insurance solution

A free or discounted insurance is included in the price of the car. The driver will need to watch their safety scores which is provided to them everyday from Teletrac.

Warnings are provided to drivers based on

their driving pattern. If they receive more than 4 warnings throughout the year, the free or discounted insurances stand cancelled

Highlights of Citroen  and  Teletrac’s  UBI  Policy

Citroen’s  Involvement  in  UBI  

Safety scores for individual vehicles based on speed, cornering, braking, and

accelerating (how driven) is provided

Drivers will have the ability to receive 12 months  of  free  insurance  on  Citroën’s  C1  

Connexion insurance Policy

11

OEM Involvement in UBI – GM’s  pure  Mileage-based Insurance Utilizes OnStar telematics infrastructure to calculate premiums based on odometer readings with a max discount of 50%

Odometer data collected from OnStar is sent back to State Farm approximately 30 days after the insured signs up for Drive Safe & Save

The insured can receive a discount of up to 50% based on the distance they travel

Highlights of State Farm Policy with OnStar

The customer provides permission to use the odometer reading from his or her monthly OnStar Diagnostics report to be forwarded to GMAC Insurance

The insurance discounts are based only on the miles driven

Highlights of GMAC Policy with OnStar

General Motors Involvement in the UBI Value Chain

Odometer readings

Source: Frost & Sullivan

12

Wireless Provider as UBI Solution Provider Telekom-Austria, Docomo, TelIT are few other wireless providers, keen to enter into the UBI market as a solution provider

Wireless Provider Insurance Company Hardware Provider Data Analytics Provider

AIG Insurance, Groupma Scope Technologies Tower Watson

Generali Seguros (Spain) Masternaut Dynamic Insights

(US)

State Farm (Drive Safe & Save program) Hughes Telematics Tower Watson

(US)

Esurance; owned by Allstate (pilot in Arizona); launch in

Texas - Tower Watson and

Agnik Minedrive

Increasing central role of Mobile operators as service integrators with excellence

in B2C relations and customer relationship management.

13

Expected Future UBI Value Chain The future will see involvement from, both OEMs (eCall legislation driven) and mobile network operators (utilizing strong existing B2C relationship)

OEMs to install the hardware in car as a factory-fitted system and are expected to partner with TSP’s for telematics services (telematics services related to vehicle diagnostics, driving behaviour, planned vehicle maintenance, and emission management).

Insurer Insured

Telematics Service Provider (TSP)

GSM Communication Operator

Map Supplier

Hardware Installer

Billing Engine

Database Management

Assistance Operators

Hardware Supplier

OEM Aggregators

Source: Frost & Sullivan analysis.

14

Example : Partner Ecosystem Highlights of Progressive and Coverbox Miles and time of the day driven are the key data points collected by insurers which shows clear focus on reducing premiums of good and safe drivers.

Panel of Insurers

Services Provider

Hardware Device

M2M SIM card Provider

Analytical Tools Insured (Coverbox policy holder)

Panel of Insurance

Companies

Pay for UBI solutions per vehicle per year

Offer data related to UBI and other telematics

services Coverbox

Prog

ress

ive

Insu

ranc

e C

over

box

Insured (Snapshot policy

holder)

Progressive Insurance

Progressive is the single face to its

customers

Wireless Provider

Services Provider

Hardware Device

Data Integrators

Wireless Modem

Source: Frost & Sullivan analysis.

15

Conclusions - Who is expected to drive the UBI market ?

Insurance Companies

Wireless Providers

OEMs

16

Frost & Sullivan Contact Information

Niranjan Manohar Industry Analyst

+91-44-66814128 [email protected]

Industry Analyst Research Manager

Praveen Chandrasekar Programme Manager

+001-248-536-2008 [email protected]

Jeannette Garcia Corporate Communications

+001-210-477-8427 [email protected]

Corporate Communications