Digital’s follow-my-leader business model will boost UBI

Carmakers will have to take the lead role in the future success of UBI by operating data sharing business models similar to those seen in the digital world.

That’s the opinion of Josep Celaya, director of corporate innovation at Mapfre who sees the long term data solutions as being embedded and managed by the car manufacturers.

Speaking to TU-Automotive, Celaya said: “The end scenario is that we reach the environment of the connected car if the business models are available, and the OEM is the one who should provide those business models, then we will have the opportunity of increasing market penetration of UBI.”

However, manufacturers must not shoulder all the burden and insurers must develop UBI services that are attractive to customers, he added.

“It’s also about designing new value propositions,” said Celaya. “Up until now it’s only been about price. If we put customer equipment in the vehicle that is expensive that will affect the business case. If you consider the market of the south of Italy, for example, suffers from a very high instance of crime where you can cherry-pick the potential risks and then business case is possible.

“But for the rest of the world, the mass market, you can’t use a telematics solution that is expensive because you cannot provide savings to the customer.”

Ultimately, Celaya said, the connectivity of vehicles will drive UBI’s broader acceptance to the wider market.

He explained: “With the connected car, where the data is already embedded in it, the manufacturer can give access to the data to insurers and other players in the industry in order to build the kind of value propositions that are not only based on price. This is the opportunity to make UBI massive.

“Yet, it’s not only about telematics anymore – telematics is like an old-fashioned battleground because we are looking at the new scenario of the connected car that offers the access to data anyway.”

Celaya also said insurers must make the case that customer private data is safe in their hands.

He said: “I see the insurers very much on the side of the customers’ interest in the access to data. Look what has happened with Facebook, for example: if you have a Facebook account you sign the user agreement so Facebook automatically owns the data. This is exactly the scenario we are now seeing with the connected car unless the regulators start doing something about it.

“Insurers don’t need to access data that could invade the customers’ privacy but we do need to access certain data that allows us to build a consumer experience. The example of the car’s battery, for instance where the service provider can get to the vehicle before the car is stranded by the side of the road unable to move.

“In order to do this, we have to deal with the manufacturer. We do not want all the vehicle data regarding its systems, what we need to do is to understand the use cases that improve the experience of the end user. This will be good for the manufacturer, it’s going to be good for the insurer but, mainly, it’s going to be good for the customer. That’s our vision.”

Celaya also warned that there are, today, plenty of operators outside of the traditional auto industry eager to enter this space if carmakers are slow off the mark in data handling.

He said: “I think that if manufacturers don’t start working in this way then competitors from outside the traditional industry will come into the market. If you look at Tesla they’ve been able to pre-sell about 400,000 cars just on the announcement of the Model 3 – no-one else in the industry has seen that.

“At the same time Chinese players are trying to copy Tesla not traditional brands. What they are learning from Tesla is a business model similar to the iPhone. You create an open innovation environment so people can reach your value proposition which will be boosted by having all the other parts of the industry being able to do something for you and make profit from that.”

He added that carmakers will have to accept the responsibility, and costs, of handling and filtering data being gathered by their connected cars.

Celaya explained: “This should be done by the OEMs I don’t see any other way. If you look at Apple for example, they invented this situation and they filter the data. If you are an application developer, you will have access to the data you need to develop an application – this is the price and the security is provided by the key player of the value chain.

“Obviously, we have a transition phase before we get there but it’s pretty obvious that in the next 10 years this will move slowly but then you have the reality of the smartphone. Until these business models become well established, the smartphone will play a key role.”