Produced by Telematics Update

Industry Overview

Usage-based Insurance (UBI) represents a fundamental change in the way auto insurance is underwritten, a move from proxy-based ratings models and history patterns to real-time driver behavior analysis. In time, it is expected to render traditional methods of risk assessment obsolete and profoundly transform the way risk is underwritten.

This report provides a solid overview of the milestones that helped shape UBI in 2013. And it discusses what to expect from 2014 and beyond, drawing on in-depth interviews with more than 30 insurance industry executives, Telematics Update’s regular coverage of the industry and two proprietary surveys.

One is an exclusive Telematics Update survey of international market sentiments drawing on the answers of 305 executives, the other a collaborative effort with A.T. Kearney focusing on key market drivers, impediments to growth, tracking device choices and value-added services in North America.


Questions the report will answer:

  • Understand UBI and how it can change your business: Learn about the benefits of Pay As You Drive (PAYD), Pay How You Drive (PHYD) and Manage How You Drive (MHYD), accurate pricing, UBI-enabled claims handling and value-added services to enhance customer experience and stay ahead of competition.
  • Understand key market drivers and barriers : Learn about market specifics in North America and Europe. Understand the main drivers of UBI adoption and barriers to entry. Understand how maturing telematics technologies and advances in portable devices are driving the evolution of UBI from PAYD to MHYD.
  • Understand paradigm shifts: Understand the paradigm shift from a race to the bottom on price – using discounts for low-mileage clients and good drivers – to value-added services. Understand UBI as a high-touch business in which customer engagement is considered essential to success.
  • Design a winning UBI strategy: Learn how to refine sales strategies to overcome common misconceptions about UBI, keeping in mind that, because UBI involves both a new product and new technology, successful consumer engagement is a vital – perhaps the most important – element in product design.
  • Pick a hardware solution to best fit your strategy:  Get an in-depth look at smartphone and OBD2 dongle-based programs, and understand the role of professionally installed black boxes, hybrid systems and embedded OEM solutions.

Who needs this report?

  • Everybody who is anybody in the motor insurance business and wants to hold onto good risk while accurately pricing the bad one.
  • Anyone who is in the data collection, processing, storage or analysis business  and wants to profit from the enormous flow of driving data generated by telematics devices.
  • Telematics hardware manufacturers who want to understand the business proposition of each UBI device offering and the kinds of device choices insurers are likely to be making a few years down the line.
  • Telematics service providers who want to understand the shift from premium discounts to value-added services for the mainstream UBI client.
  • Car OEMs who want to learn about the various business opportunities presented by providing UBI through their embedded telematics systems.

Previous Report buyers

  • Toyota
  • Zurich
  • Progressive
  • LoJack
  • Huawei
  • Allianz




Project definition

Telematics Update engaged in extensive consultation with more than 30 leading industry  figures to define research gaps and provide the most up-to-date, informed analysis of industry trends and needs. All research was guided by the input of an advisory panel of industry consultants, to ensure that the report focused on real world industry needs and objectives. Where appropriate, insights gleaned from these interviews are supported by survey data, and publicly-available secondary research.

Breakdown of TU’s Insurance survey, November 2013

Breakdown of TU’s Insurance survey, November 2013


Report approach

Telematics Update realizes that the state of the industry is in considerable flux. Companies are putting forward new business models and new products all the time. At this point, it is impossible to say which of these approaches may prove most competitive. In fact, it is precisely this uncertainty about the relative advantages of alternative approaches being pursued that has led us to create this report at this time. Rather than attempting to impose consensus on issues where considerable debate continues about optimal business strategies, and forecasts, among other issues, this report sets out competing points of view, to allow readers to get a clear sense of possibilities.


Industry sentiment

The Telematics Update team sought out the expertise of a wide range of industry executives. The 2013 survey was conducted with confirmed a broad cross section of insurance focused industry executives.

Key methodology statistics:

  • Peer reviewed by 4 industry experts
  • 30+ executive interviews
  • 6 month research project
  • Commissioned based on executive demand and feedback
  • A month of design, editing and refinement
  • Industry surveys to approximately 300+ insurance telematics focused executives



  • Welcome
  • Key learning
  • Industry reviews
  • About Telematics Update
  • Thought leadership
  • Acknowledgements
  • Index of figures and tables
  • Introduction
  • Executive summary
  • 1. Current state of the insurance telematics market
    • 1.1 Nature and benefits of usage-based insurance
      • 1.1.1 Accurate pricing and leaving base rates intact (for now)
      • 1.1.2 Better claims-handling
      • 1.1.3 Fewer accidents, lower average cost per claim
      • 1.1.4 Premium reduction is key for consumers
      • 1.1.5 Value-added services
    • 1.2 UBI market barriers and drivers
      • 1.2.1 Barriers to growth
      • 1.2.2 Market drivers
      • 1.2.3 Regulation and customer value proposition
      • Regulation
      • Customer value proposition
  • 2. Current market trends
    • 2.1 Business models
    • 2.2 Data analytics
    • 2.3 Consumer engagement strategies
    • 2.4 Consumer education
    • 2.5 Brokers and mobile network operators disrupt the value chain
      • 2.5.1 Brokers team up to offer UBI solutions
      • 2.5.2 Mobile network operators compete to offer UBI
  • 3. The great device debate
    • 3.1 Professionally installed black box
    • 3.2 Self-installed onboard diagnostics device (OBD2 dongle)
    • 3.3 Smartphone
    • 3.4. Embedded OEM solution (line-fit)
    • 3.5. Hybrid solutions
  • 4. Key UBI markets: North America and Europe
    • 4.1. North America
      • 4.1.1. United States
      • 4.1.2. Canada
      • 4.1.3 Conclusion
    • 4.2. Europe
      • 4.2.1. Italy
      • 4.2.2. United Kingdom
      • 4.2.3. Germany and Spain
    • 4.3. Australia
    • 4.4. The Google wild card
  • 5. Consumer engagement strategies
    • 5.1 Current UBI: Lackluster, underleveraged, boring
    • 5.2 Jazzing things up
    • 5.3 Rewards other than discounts
    • 5.4 Engage your whole organization
    • 5.5 Go digital
    • 5.6. Social media: The latest trend in consumer engagement
    • 5.7. The power of gamification
  • 6. UBI for commercial lines
    • 6.1. Market potential for fleets and UBI
  • 7. Data and data analytics
    • 7.1. Data storage and processing
    • 7.2. Data quality
    • 7.3. Data analytics
    • 7.4. Data privacy
    • 7.5. Data standards
    • 7.6. Data collection
  • Industry learning
  • Methodology
  • List of acronyms



List of Figures - See Exactly What's in the Report

  • Figure 1: Typical benefits of UBI
  • Figure 2: Most business-critical benefits enabled by UBI
  • Figure 3: Most business-critical benefits enabled by UBI, by region
  • Figure 4: Base rate increase for non-UBI drivers
  • Figure 5: Average score for automatic crash notification, by region
  • Figure 6: Factors critical to the design of a successful UBI product, by region
  • Figure 7: Relevance of value-added services for a successful UBI product
  • Figure 8: Value-added services most valued by consumers
  • Figure 9: Biggest impediments to UBI growth and adoption
  • Figure 10: Most important growth drivers for UBI
  • Figure 11: What will be the most compelling element of the proposition in 3-5 years (details)
  • Figure 12: From PAYD to MHYD
  • Figure 13: UBI business models by popularity
  • Figure 14: Primary gatekeeper of the telematics ecosystem
  • Figure 15: UBI hardware outlook, all respondents
  • Figure 16: SWOT analysis of the professionally installed black box
  • Figure 17: SWOT analysis of OBD2 dongle
  • Figure 18: SWOT analysis of smartphone-based UBI
  • Figure 19: SWOT analysis of embedded OEM solutions
  • Figure 20: SWOT analysis of hybrid solutions
  • Figure 21: UBI and the road to widespread adoption
  • Figure 22: Insurance telematics consumer touch points
  • Figure 23: UBI communication channels
  • Figure 24: The UBI data paradigm
  • Figure 25: Breakdown of TU’s November 2013 survey by primary business of respondent
  • Figure 26: Breakdown of TU’s November 2013 survey by job function of respondent
  • Figure 27: Breakdown of TU’s November 2013 survey by country



List of Tables

  • Table 1: Most business-critical benefits enabled by UBI (details)
  • Table 2: Most business-critical benefits enabled by UBI, by region (details)
  • Table 3: Base rate increase for non-UBI drivers (details)
  • Table 4: Factors critical to the design of a successful UBI product, by region (details)
  • Table 5: Value-added services most valued by consumers (details)
  • Table 6: Consumer willingness to pay for value-added services
  • Table 7: Biggest impediments to UBI growth and adoption (details)
  • Table 8: Most important growth drivers for UBI (details)
  • Table 9: Regulation and customer value proposition (details)
  • Table 10: Change in average premiums for young-driver segment in the U.K., 2012-13
  • Table 11: Reasons for purchasing UBI
  • Table 12: What will be the most compelling element of the proposition in 3-5 years (details)
  • Table 13: UBI business models by popularity (details)
  • Table 14: Primary gatekeeper of the telematics ecosystem (details)
  • Table 15: UBI hardware outlook, all respondents (details)
  • Table 16: UBI hardware outlook, North America and Europe (details)
  • Table 17: UBI market penetration, mature markets
  • Table 18: UBI and the road to widespread adoption (details)
  • Table 19: Top 10 U.S. insurance carriers by direct premiums written (total private passenger auto), 2012
  • Table 20: North American UBI market overview
  • Table 21: Italian UBI market overview
  • Table 22: U.K. UBI market overview
  • Table 23: UBI communication channels (details)
  • Table 24: Breakdown of TU’s November 2013 survey by primary business of respondent (details)
  • Table 25: Breakdown of TU’s November 2013 survey by job function of respondent (details)
  • Table 26: Breakdown of TU’s November 2013 survey by country (details)



The Ultimate Insurance Telematics Experience

As well as B2B reports, Telematics Update organises world-renowned conferences. At Insurance Telematics USA 2014 700+ senior-level insurance and telematics execs will meet to discuss how to take UBI to the next level and boost customer loyalty.

Telematics Update has put together a diamond pass that incorporates a full conference ticket and the Insurance Telematics report. This pass includes:

  • Full 2-day conference pass with access to all presentations and panel debates to help your business overcome the latest UBI challenges (tickets alone are worth $1895)
  • Access to full conference audio recordings with panels and presentations so you can review the important discussions back at the office
  • 80 page Insurance Telematics Report with proprietary B2B survey data of 300 execs that you can access now to ensure your up-to-speed with UBI and get the most out of conference discussions (worth $3195)
  • Access to networking lunch, coffee breaks and drinks party so you can meet those actively doing business in the US insurance telematics market and scope out partnerships
  • Full event summary report sent to you post-conference that will detail all the key trends, discussions and analysis of the live audience polls conducted on the day – so even if you miss a session whilst busy networking you can still capture the important information



You can see what some of your industry peers thought about the report here:


This is a very good summary of the recent past and a great insight into what to come from UBI, five stars out of five from me

Paul Stacy, Director, Wunelli

For me the value in this report comes from the surveys, these caused us to re-examine our own analysis. The writers of this report clearly appreciate the many different business models destined to co-exist in the UBI market. Any reader will gain useful insights into UBI business trends, personal and commercial, likely to affect their business processes and retention rates.

Christopher Carver, principal architect, Maris Group

The 2014 Insurance Telematics Report provides good insight into the evolving world of insurance telematics, taking the discussion beyond the relative merits of telematics devices & technology to the different insurance propositions and the importance of data analytics.

Simon Ralphs, CEO, Telematicus

With exclusive survey data and in-depth insights provided by key industry experts, this report provides a very good quality and quantity of content.

Jacques Amselem, CEO, Allianz Telematics


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For sales enquires please contact Simi Ramabhadran on +44 (0) 207 422 4338 or



Zsófia Kulcsár
Zsófia Kulcsár
Marketing Manager
Telematics Update

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