IMS Presentation at Insurance Telematics USA 2012 - Chicago - September 5, 2012

IMS Panel Discussion Insurance Telematics USA September 5, 2012

IMS Inc. Proprietary and Confidential

UBI 2.0: Taking it to the next level

Purpose

• This presents IMS

thoughts on how to

accelerate the success

of usage-based insurance

in UBI 2.0

2

UBI is evolving rapidly

• UBI 1.0 – Value for insurance

companies

– Linked to pricing

– Related only to auto insurance eco-system

– Technology plugged into OBDII

– Focus on cost

– Communications only on back-end

• UBI 2.0 – Value for insurance firms,

consumers & partners

– Linked to pricing & CRM

– Related to connected cars

– Technology becomes distributed – plugged-in, brought-in, built-in & beamed-in

– Focus on profitability

– In-vehicle communications starting

Telematics Update Survey

Barriers to growth

Making the economics work

Customer adoption

Management support

Understanding the data

43%

30%

15%

13%

Source: Survey of 400 Telematics Update contacts

Intel

Analytics

Analytics Data

Devices & Deployment

Business Foundation (Business Model and Adoption)

Value Chain – IMS Model

UBI Business Models

Intel

Analytics

Analytics Data

Devices & Deployment

Business Foundation (Business Model and Adoption

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Premium $ Distribution

Net Margin

(4%)

Taxes (2%)

Op Expenses

(24%)

Claims (70%)

Insurance Telematics Business Case

Reduce Claims

Increase Value of Premiums

Increase # of Policyholders

USA Today Poll

Telematics TCO - Trends

Operating Expenses

(Monthly)

• Wireless Transport

• Data Collection & Storage

• Device Management

• Analytics & Visualization

• Customer Care

• Telematics as a Service

• Lease

• BYOD

Alternate Models

• In 2013: $75 is in sight

Dedicated OBUs

Intel

Analytics

Analytics Data

Devices & Deployment

Business Foundation

(Business Model and Adoption)

UBI Best Practices

Adoption: Largely Driven To Date By Discounts. Is It The Right Way?

13%

39%

47%

0% 20% 40% 60% 80%

Would Participate For 10% Discount

Would Participate For Between 11-20% Discount

Want At Least 20% Discount to Participate

2011: What Discount Would It Take To Participate?

• Is a discount the most compelling reason to adopt?

• What happens when the incentives don’t lead to user adoption?

• What might these programs look like tomorrow?

Strategize. Choose Wisely. Treat Kindly.

Watch Your Relationships Grow.

Adoption as a KPI is key, but don’t forget about retention! Find new, compelling reasons to attract users.

Balance VAS offerings where appropriate to leverage the desires of your “best risk” drivers.

Encourage telematics as the only long term alternative. Be the right influence on tomorrow’s market.

Intel

Analytics

Analytics Data

Devices & Deployment

Business Foundation (Business Model and Adoption)

Devices & Deployment

UBI 1.0 Deployment

• Early eco-system driven largely by

– Auto insurance companies

– Wireless carriers

– Analytics companies

– Telematics service providers

UBI 2.0 Eco-system – The Evolution of Driver Intelligence Managed Services Integrated & Scalable Meaningful Data Personalized Experience

Premium Services / VAS

Auto vehicle locator (AVL) Roadside assistance Vehicle diagnostics Traffic alerts / routing Road charging Green reports Stolen vehicle recovery

Communication Protocols / Wireless Carrier GSM CDMA WCDMA Wi-Fi BT RFID

Data Visualization

Web or mobile based solutions Customized / Branded B2B / B2C portals Driving reports, coaching tips, scoring,

account and vehicle management

Business Intelligence

Data Analytics Non-actuarial Scoring Driver identification Behaviormatics

System & Data Management

Secure data warehousing System monitoring and scalability Data exports and analysis Administrative reports

Logistics & Fulfillment Solutions 3PL vendor selection Forward/Reverse logistics SIM provisioning Inventory management Personalization Enrolment models

Application

UBI Young driver Mature driver Fleet Road charging

Device Selection and Configuration

Location tracking: GPS or non-GPS Port: OBD or Cigarette Voltage: 12V or 24V Accelerometer options Data collection and transmission intervals OTA upgradeability Antenna selection Multi-network device Panic button Feedback channels: web, mobile, email,

SMS, 2-way radio, etc

Vehicle Supportability

OBD-2 or non OBD-2 support Gas , diesel, hybrid, and electric support Cars, vans, trucks, heavy duty Device agnostic TSPs

Systems Integration

Integration with enterprise systems Automation with exception handling Process engineering Single sign-on

Program Mgmt & Support

Training Adoption Support Retention

UBI 2.0 vs. 1.0 Devices

• More powerful

• More versatile – All vehicle types

– More ports

– Able to add value added services

• More connected – GSM/CDMA

– Bluetooth/RFID/Wi-Fi

• More reasonably priced

UBI 3.0 Connected Car Eco-system

Content Providers =

Enhanced VAS

Automotive OEMs (Built-In devices, etc)

Superior Innovation from Device Mfrs

More Robust Scoring – Data Analytics Partners

Seamless Integration

Sophisticated Mobile Applications

UBI 3.0 Connected Car

Policyholder Personalization

Data, Analytics & Intelligence

Intel

Analytics

Analytics Data

Device & Deployment

Business Foundation

(Business Model and Adoption)

Transforming Data Into Intelligence

Smart Data Acquisition

Context-Relevant Representation

Intelligent Analysis and Visualization

Advanced Traveler-Centric Feedback Loops

Smart Data Acquisition for Insurance Companies

• Extract Maximum Value From Data – Data is fundamental for understanding

– High quality data drives accurate insights

• Right Data, Right Time? – Variable frequency data collection

– Metadata & parameters describing • Precision

• Accuracy

• Relevance

Context-Relevant Representation

• Advanced Context-Relevant Algorithms – Aggressive acceleration

– Hard deceleration

– Rapid cornering

• Relevant Non-GPS Context – Distance and timing between intersections

– Identification of right turns, left turns, and roundabouts

– Aggressive maneuvers, etc.

• Relevant GPS Context – Weather

– Road Type

– Regions of interest …

Intelligent Analysis and Visualization

• Secure Transfers – Real-time, Event-Driven, On-Demand

– Optimal Compression

– Bidirectional Communication

• Distributed Intelligence – Low Latency Interaction

– Accessible Warehouses

High Precision Driving & Driver Info

Share Intelligence With Policyholders

• Non-actuarial scoring presents a new way to assess risk

• Also can start a Customer Relationship Mgt. program to bring users into the conversation

• Empower drivers with scoring, coaching & tips

• Employ PC and mobile portals

Employ Device For Uses Beyond UBI

Summary: UBI Is Evolving Rapidly

• UBI 1.0 – Value for insurance

companies only

– Linked to pricing

– Related only to auto insurance eco-system

– Technology is plugged into OBDII

– Focus on cost

– Communications only on back-end

• UBI 2.0 – Value for insurance

companies, consumers

& sub-lease to partners

– Linked to pricing & CRM

– Related to connected cars

– Technology becomes distributed – plugged-in, brought-in & built-in

– Focus on profitability

– In-vehicle communications starting

UBI 1.0 Eco-system Is Relatively Simple

• Based mainly on

– Auto insurance companies

– Wireless carriers

– Analytics partners

– Telematics service providers

UBI 2.0 Eco-system Is Attracting New Players

• Automotive

– OEMs

– Dealers

– Service providers

• Software platforms

• Device manufacturers

• Software players

• Content providers

• Others

UBI 2.0 Is Disruptive

• UBI 2.0 disrupts the auto insurance Industry

– Price model

– CRM models

• UBI 2.0 will disrupt the automotive industry by being the first mass market to connect cars

For more information on how you can benefit from IMS’ UBI 2.0

programs please call Blair Currie at +1 519 745 8887 or email

at [email protected]