UBI should be an easy sell on its own merits

Insurers need to recognise the power of UBI as a service and stop assuming it should be discounted.

That’s the opinion of Amodo’s CEO, Marijan Mumdziev, who sees growth potential for the technology based on wider customer demand for tailored telematics services.

Speaking to TU-Automotive, Mumdziev admitted that many in the insurance industry have been disappointed by the poor penetration of UBI in the European markets but can be blamed on the marketing of the technology to prospective customers.

He said: “UBI is not being placed on the market in a way that is sustainable for insurance companies and that’s why it hasn’t taken off in the way that many had predicted.

“And so we need to focus on the underlying reasons why UBI has not taken off, how it is being placed in the market today and how it should be placed on the market.”

Mumdziev said other European markets should not be compared to those in the UK and Italy which have their own specific issues.

“The UK and Italy have dominated the discussion over telematics in recent years. The specific insurance conditions in these two countries are not present in other European markets.

“Many other countries have been raising the issue whether UBI can be a mass market offering. At the same time, the lowest UBI proposition in central Europe has become one of the fastest growing propositions in the whole of Europe.”

He said there was no ‘silver bullet’ to the problem but that insurers need to take a radically different approach to that being assumed at the moment.

Mumdziev said: “If you want to make UBI a mass market proposition, you need to have a viable business case with the technology. And to do this it should, at least initially, be based on the smartphone.

“If you want to provide additional services, on top of the device’s own services, for the market, then you should charge for these services. It should not go with a discount because, today, you are first of all subsidising the technology by paying for the embedded devices, then having to give a discount on top, and this way of way of launching a product in any other country than the UK and Italy, just does not fly.

“That’s because of the loss ratio the insurers have to work with and the profitability there is not sufficient margin to subsidise the technology.”

He highlighted the telematics launch in Austria by the UNIQA Group where the premise was: if you want to have telematics, you have to pay more for the extra services being provided. He said: “So this is one way telematics can be launched successfully.”

Mumdziev also insists that the smartphone is the best way to accelerate penetration of UBI in most markets. “Why? Because you want to engage the customer with this solution first to provide the value added services as cheaply as possible.

“The challenge, naturally, is to ensure the customers will be engaged with the smartphone solution. The key question is: how do we make our customers regularly engaged with the smartphone device proposition?

“The whole business model comes into play here. We are a spinoff of a digital marketing company and our particular task was to help our clients engage with their customers to connect and make a relationship between their products and the customers.

“With this background experience, we apply it to the telematics space and the insurance industry. Meanwhile, the very tangible outcome is that our smartphone app is the best rated globally compared to other telematics providers. We have the highest customer engagement and, are the fastest growing, with the highest adoption rate.”

Amodo has recently announced its partnership with the Italian telematics company Viasat Group where Amodo uses a Behaviour Scoring Engine analysing driving style in context, by comparing driving actions against road data, driving conditions and weather.

Mumdziev added: “We are conducting the driver behaviour analytics for this partnership with Viasat that are already managing about 600,000 connected vehicles. To my knowledge this is the first partnership of its kind and it’s possible to discuss is this how the way industry will develop in future? You could have more companies specialising in a niche area.”