Insurance Telematics USA 2015 Day I: Still many ways to skin the UBI cat

Insurers have reached huge milestones in terms of partnerships and acquisitions, as well as introducing new products into the market. Yet, there are still roadblocks ahead: autonomous cars and the IoT bring complex problems and huge opportunities, according to Andrew Pym, head of insurance research at TU-Automotive, introducing day one of the conference.

Technology is evolving but penetration hasn’t kept up. As usual, when the audience was asked to raise hands if they were personally enrolled in a usage-based insurance programme, only about 10% did so.

In his keynote, David Lukens, director of telematics at LexisNexis, presented the results of a recent consumer survey that found that consumer awareness and demand are flat in the US. He advised the industry to look to the rest of the world for best practices.  While in the US, UBI is focused on giving drivers discounts, in the rest of the world, he said: “The most successful programmes are those that integrate with and support that company’s brand identity and its relationship with customers.”

This was a major theme of the first day of the conference. Discounts might help with customer acquisition but, once a driver has received a discount, it’s no longer seen as valuable. Insurance customers value benefits that they’ve earned through better driving, according to LexisNexis research.

Progressive Insurance is experimenting with new kinds of services, including using big-data analytics to identify cars whose alternators are likely to fail and then notifying the customers. So far, customers welcome the information and don’t find it creepy, according to David Pratt, general manager of usage based insurance for Progressive.  Regarding the question about discounts versus value-added services as a driver of UBI, Pratt added: I get that savings is just one of the possible value propositions – but a lot of people like it.”

Moving to smartphones

There’s been plenty of debate about whether devices plugged into the OBD-II port or smartphone apps are the best strategy for insurers. It is remarkable how high a profile smartphone apps have today.

In fact, Progressive announced it’s working on a mobile version of its Snapshot UBI programme, with Censio doing the development work. The app will give drivers feedback at the end of each trip, as well as tips for improving their driving scores.

There are certainly downsides to using the phone, as Robin Harbage, a director of Towers Watson pointed out. They usually don’t collect all trips; apps might drain the battery; and the data isn’t perfect. Nevertheless, he said: “We can get a high correlation between the sample we can get and their actual driving behaviour.”

Russ Oldham, senior vice-president of claims for HiMEX, said trip filtering is the biggest hurdle for mobile. “The device needs to know if you are driving your car, riding in your friend’s car, riding the bus or riding a horse.”

And what’s the best nail depends on what kind of hammer you’re selling. Some major companies announced they were testing or rolling out programmes based on smartphone data collection.

Jeff Blecher, senior vice-president of strategy for Agero, said that his company has focused on mobile technologies because they can get to market quickly. Agero tested 275,000 accidents to determine the reliability of mobile phones for crash detection. “The data is incredibly precise, very rich and provides a lot of information,” he said.

Representing the argument for the other side, Danlaw provided a data sheet comparing four approaches: automotive OEM-installed; OBD2 device plus Bluetooth; OBD II plus cellphone; and mobile only. Its conclusion: a mobile device is impractical or not possible for all potential safety and security services.

But in the US, Lukens said: “Smartphone apps are the key to big scalability. All of our customers in every single market are migrating to smartphone apps.”

Still, the OBD port isn’t going away, said Robert Gruszczynski, OBD communication expert for Volkswagen Group of America. It’s required by air-quality regulators. While lots of vendors would like to get access to vehicle data via the OBDII port, he said that OEMs are discussing alternative ways to provide this to partners, rather than risking the security and operation issues that could be associated with the port.

Better claims management

Consumer satisfaction with the way their claims are handled may be the most important factor in customer retention. Telematics data has the potential to transform the process by providing automatic crash notification technology.

Blecher, said his company proposes leveraging technology and services to not only decrease accidents but also to improve accident management, while increasing customer loyalty. The company calculates that it can save 3,000 lives per year, reduce “keys-to-keys” cycle time by five to eight days, and save the industry $4.2Bn (£2.7Bn) per year.

More work needs to be done in order to unleash these opportunities, a panel concluded. For one thing, as Nino Tarantino, CEO of Octo Telematics, said: “We need to be able to distinguish a big crash from a small crash.”

That would allow insurers and claims departments to focus on serious claims and to provide immediate services that focuses on the needs of the driver, according to Steve Medeiros, vice-president of insurance for Agero. The message shouldn’t be, “What’s your policy number?” he said, but rather, “We’re here to help, what do you need?”

Connected cars and the future of UBI

A lot of the data-collection problems will go away when most cars on the road have a persistent connection. Harbage said: “With the concept of ambient data, every driver in the world, when they come to you, you can know whether they are a good or bad driver and do something about it. It’s not that far away.”

Getting ready for all this, Verisk Analytics announced Verisk Telematics Data Exchange, expected to launch mid-2016, offering an open platform for managing connected-car data; carmaker General Motors (GM) was announced as an exclusive partner.

Data flowing into Verisk’s platform or others could include much useful information from third parties and devices connected in the Internet of Things. For example, Andy Rice, vice-president of product and analytics, WSI, said that his company could provide precise data that could help in claims adjustment. For example, it can tell the precise amount of rain falling in any 250m2 area. It could also help with risk assessment, for example, by determining whether a particular driver is more or less likely than most to drive in heavy snow.

However, Kevin Daley, who handles Business and Solution Thought Architecture for IBM, pointed out that in order to use such information in real time, the speed of analytics is a problem. “We have the data from all these sources but the fusion of that is the differentiator,” he said.

Big news

As always, Insurance Telematics USA 2015 saw major announcements, including:

Verisk Analytics announced the Verisk Telematics Data Exchange, to be available mid-2016. It will be a marketplace for connected-car data in which data will be distributed in a standard way, allowing consumers to opt in to OEM safe-driver programmes, usage-based insurance programmes and other services.

Inrix announced INRIX Road Weather, a service which provides critical information on road conditions, including updated alerts every 15 minutes. The service was developed in collaboration with Global Weather Corporation (GWC). It uses data from in-vehicle sensors with GWC’s algorithms to predict temperature and precipitation on the road.

Towers Watson and Cambridge Mobile Telematics announced they will provide a usage-based insurance solution, as well as other value-added services, that will be available in most countries. It will include Towers Watson’s DriveAbility program and CMT’s DriveWell telematics product.

Zubie announced a suite of contextual analytics features it said would deliver deeper insights around driver behaviour and profiles. New features are Place Match to identify frequent locations; Driver Match infers which driver within a household is behind the wheel; and Speed Analytics incorporates speed-limit data.

Ageroand The Floow said they’d collaborated to enhance Agero’s Driver360TM usage-based insurance telematics platform with The Floow’s advanced driver scoring and analytics capabilities.

Baseline Telematics launched the BaseDrive Program that includes a configurable smartphone app, a client-facing web portal, a back-end CRM, a policy administration system, a Bluetooth OBD telemetry transponder and a web-based administration console.

msg global solutions announced that its Telematics Analyzer product, a software solution that enables efficient and secure data collection, analysis and scoring of telematics-based driving data, can now integrate with any back-end system.

Spireon announced the device- and vehicle-agnostic NSpire platform which provides functionality including feeding core data elements into a UBI project, delivering turnkey programmes for scoring; first notice of loss; and claims, including fulfilment and policyholder support.


Stay tuned for another report on Day Two of Insurance Telematics USA.

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