Liberty Mutual: Smartphone usage is “one of the driving factors ushering in insurance telematics”

Liberty Mutual: Smartphone usage is “one of the driving factors ushering in insurance telematics”

What does your company do?

Liberty Mutual Agency Markets, a business unit of Liberty Mutual Group, offers personal and commercial insurance through independent agents throughout the United States. Agency Markets operates under a unique regional/national model that leverages the service-oriented focus of regional operations with the power of a national infrastructure to deliver quality products and services to agents and brokers and the customers they serve.

Liberty Mutual Group is the fifth largest property and casualty insurer in the United States, and ranks 71 on the Fortune 500 list of the largest U.S. corporations, based on 2009 revenues.

What is your role in the insurance telematics market?

Over the past few years, I have been focused on delivering a better consumer experience through the use of telematics. Our first program, Teensurance, was designed to help parents protect their teen drivers during an exciting yet dangerous time in their lives. In this situation, telematics technology enabled Safeco and our agency partners to extend the customer relationship beyond traditional insurance.

Next, we moved into the commercial insurance space, with Onboard Advisor, where telematics was already delivering strong returns through productivity and fuel savings. Our goal here is to provide our agents and their customers with additional risk management tools that help improve the safety of their fleets. In return, we can improve their insurance costs through discounts correlated to each company’s level of risk. Many of the insurance benefits are simple to quantify so business owners can easily track their ROI.

Most recently, we have been working on new personal lines programs that will reward our better than average drivers. So, there are more exciting things on the horizon.

How important is telematics throughout the insurance market space?

The ability to measure how safe drivers are in relation to each other seems to be a better predictor of risk than using some of the other proxies the insurance industry uses today. That being the case, telematics should continue to gain momentum as costs decline, models are proven to be predictive of accidents, and privacy concerns abate.

Which trends will impact the industry the most in the coming years and why?

Oddly enough, I believe smartphone usage is and will continue to be one of the driving factors ushering in insurance telematics. The growth of connected and location-based consumer services is getting people familiar with the right types of technology and is even changing expectations about what should be possible. It seems natural that once the cost issue is removed that good drivers will want to exchange proof of their safe behavior for lower insurance costs. (For more on smartphones, see ‘The smartphone: friend or foe of in-car infotainment?’.)

Another important trend is the convergence of devices and information. There is an increasing need for our phones, houses, cars, laptops, tablets, etc. to work together to deliver services that make our lives easier to manage. Insurance is one of those areas in life that people would prefer to think about less. As consumers, we should be able to pass protected information seamlessly to our trusted agents so they can ensure we have the proper coverage.

Where do you see the insurance telematics industry heading in the next five years?

In 2015, insurance telematics should be experiencing healthy growth and will likely change many of the industry’s business practices as we find new ways to take advantage of the improved quality and timeliness of information.

Mike Slattery will be speaking at Insurance Telematics USA 2010 in Chicago on September 13–14.

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