Q&A: Telematics, young drivers and UBI

Q&A: Telematics, young drivers and UBI

The Marmalade Group aims to get young drivers on the road in safer, newer cars at an affordable price. That means not only negotiating discounts with auto makers but also devising special, telematics-backed insurance products. Crispin Moger is managing director of the family-owned company, which operates two divisions: Young Marmalade and Provisional Marmalade. Young Marmalade provides telematics services to help young drivers develop safer skills, so they can get lower insurance rates. Provisional Marmalade is an insurance product for learners that provides coverage without endangering parents’ policies and rates. Moger spoke with TU contributor Susan Kuchinskas about how Marmalade gets insurers and OEMs to the table. (For more on UBI, see Industry insight: Insurance telematics.)

First, tell us about yourself and your two projects.

We specialize in young drivers. Young Marmalade was the first and focused on driver safety. It’s been about finding safe, reliable, affordable cars, which we combine with an insurance package to get young drivers on the road. We get good rates from motor manufacturers and then link them with the insurance to make a nice package. Provisional Marmalade, which has been running just over three years, focuses on helping learning drivers by giving them experience pre-test to make them better drivers.

The conventional wisdom is that young drivers are more risky and therefore should be more expensive to insure. Is that just wrong?

Yes, it’s a fact that young drivers are more expensive to insure. All the actuarial underwriters will tell you that young drivers are riskier. Our view has been that not all young drivers are bad drivers. If you can help them, give them experience, show them the right way to drive, you can reduce that risk.

You provide an extra insurance package so if there is a claim, it doesn’t affect the parents’ insurance, correct?

That’s our Provisional Marmalade product. The traditional way in the UK of insuring your son or daughter would be to ring up your broker and ask them to add the son or daughter to your own policy. What normally follows is a fairly high premium in addition to your own premium plus an administration fee. Should that young driver have a claim, it would be the insured driver’s no-claims bonus that goes. Provisional Marmalade acts as almost a bolt-on insurance policy. We are insuring the young driver’s responsibility to the owner of the vehicle. Should there be a claim, it has no effect on the main insurer’s policy.

You also have a telematics device, a black box. Tell us about that.

We’ve been working in the telematics market for two years. We initially used a supplier that worked on curfews; then we stated to develop our own, and we use another company that has a lot of algorithms for driving behaviour. With our ethos of trying to help young drivers, and thinking not all young drivers are bad, we built a telematics application around that. We’re trying to get the lowest possible premium at the start and saying to young drivers that, if they drive sensibly, we will not adjust their premium.

You seem to have created a new role in the automotive and insurance value chains. Are you sort of a packager and integrator of products and services delivered by others? Or how do you describe what your company does?

We’re kind of a distributor. We look at areas that we think can be improved or worked on and write a scheme or package or design something around that. From the motor manufacturer’s point of view, young drivers very rarely buy new cars in the UK because they can’t afford to insure them. Many manufacturers are not getting customers through the door until their early or mid-twenties. We can help manufacturers by introducing customers to the brand early on. From the insurers’ point of view, the old ethos in UK was that you need to buy the young person a £500 banger, because they’re only going to crash it. But you don’t want the young person to crash. If you can put them in a lower-powered but safer vehicle, there’s a certain pride engendered in the car. Also if they are in an accident, they’re better protected, and that reduces the chance of heavy personal injury claims.

In the United States, it’s hard for car companies and insurers to come together. Was it difficult to get auto makers on board?

Initially, yes. It’s understandable that manufacturers don’t necessarily want to give preferential terms to everybody, and they have a big franchise network all around the country that has spent a lot of money building their shiny gin palaces. They don’t want someone else undercutting them on price. What we demonstrated was that young buyers are not buying new cars because they can’t afford the insurance. We gave a solution to the manufacturers, and we work with quite a number of them now.

What’s the next step for your company?

We want to grow telematics as quickly as we can in the UK and even globally. I see huge value in telematics in how it can help driver behaviour and claims rates and profitability for insurance companies. Our frustration is that a lot of insurance companies are still stuck in past with the statistical data they have built up. It’s not that that data is flawed, but we have seen massive changes in driver behaviour thanks to telematics.

Susan Kuchinskas is a regular contributor to TU.

Listen to a podcast with Crispin Moger:

Listen to a podcast with Crispin Moger: Podcast: Telematics, young drivers and UBI.

For more on UBI, see Industry insight: Insurance telematics.

For the latest on UBI, visit Insurance Telematics Europe 2013 on May 7-8 in London.

For all the latest telematics trends, check out Telematics India and South Asia 2013 on April 17-18 in Bangalore, India, Data Business for Connected Vehicles Japan 2013 on May 15-16 in Tokyo, Telematics Detroit 2013 on June 5-6, Content & Apps for Automotive Europe 2013 on June 18-19 in Munich, V2V & V2I for Auto Safety USA 2013 on July 9-10 in Novi, MI, Insurance Telematics USA 2013 on September 4-5 in Chicago, Telematics Russia2013 on September 9-10 in Moscow and Telematics Munich 2013 on November 11-12.

For exclusive telematics business analysis and insight, check out TU’s reports: In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.

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