Automotive Insurance Telematics Outlook – Europe And North America
May 2013
Niranjan Manohar, Industry Analyst Frost & Sullivan’s Automotive & Transportation
Research Group
2
Agenda
Telematics-based Insurance - Overview 3
Insurer UBI Strategy Comparative Analysis 4
Existing UBI Value Chain 6
What's the Market Like – UBI Market Snapshot 7
Regional Analysis of European UBI Market 8
OEM’s Involvement in UBI 9
Examples of OEM Involvement in UBI 10
Wireless Provider as UBI Solution Provider 12
Expected Future UBI Value Chain 13
Partner Ecosystem Highlights - Examples 14
Conclusion 15
Frost & Sullivan Contact Information 16
3
Telematics-based Insurance - Overview Driver behavior analysis is the key type of telematics-insurance solution OEMs, especially, are keenly looking into – reaching out to specific age buyers & keeping costs down
PHYD+Miles = 2 Step Insurance Discount, current TREND
Complete third party support for OEMs
Ability to reach out to first-time buyers
Rating algorithms key – real-time data
Privacy laws don’t affect if no GPS
PHYD Driver Behavior Mileage-based PAYD+Crash
Management
PAYD Combination of
Miles+PHYD
Telematics Insurance
Single Step Flat Discount
Single Step Multi-level Discount
2 Step Multi-Level
Discount
2 Step Discount+ Crash Analysis
4
Insurer UBI Strategy Comparative Analysis (North America & Europe) In most cases hardware is owned by the insurance company (sometimes rented by hardware provider to insurer), installation cost is non-existent
Parameters
Name of UBI Program Snapshot On-Board Advisor Insurethebox Coverbox
Commercial Launch Date 2010 2010 2010 2009
Type of UBI Miles, When & How Pay How You Drive Miles Miles, Where & When
Current Geographic Presence 43 States 23 States UK Only UK & Northern
Ireland
Future Geographic Expansion
AK, CA, HI, IN, NC, TN and WA
Expansion to other states Pan Europe No expansion
OEM / Aftermarket Fitment Aftermarket Aftermarket Aftermarket Aftermarket
Discounts <=30% >=15% Flat Discount Flat Discount
Patent Issues NA NO NO NO
Trial Periods Term Basis – 6 Months 2 Years None 14 Days
Cancellation Fee None None $100-120 $30-160 (post 14 days)
Source: Frost & Sullivan
5
Insurer UBI Strategy Comparative Analysis (North America & Europe) In addition to basic insurance features, insurance companies are packaging additional features, such as vehicle tracking and 911
Parameters
Stolen Vehicle Tracking
eCall / 911
Crash Management
Fleet Management
GPS Tracking
UBI Target Users All ages
Drivers of commercial fleets (Class 1 to 8) and Teens
All ages More useful to teens
Experienced and young drivers (<23 years)
Source: Frost & Sullivan
6
Existing UBI Value Chain The current UBI market is controlled and driven by insurance companies with the services being leased/rented to TSP’s of the insured on policy contract basis
Insurer Insured
Telematics Service Provider (TSP)
Web access with details about their
driving if contract is with the TSP
Self Installation of telematics hardware (for example device connects to the
OBDII port – no professional installation)
Installs the telematics hardware through an
installer ( depending on insurance provider)
Provides motor insurance cover based on UBI
programme
GSM Communication Operator Map Supplier Hardware Installer Billing
Engine Database
Management Assistance Operators
Hardware Supplier
Insurer TSP: Pays monthly telematics
package (dependent on basis of contract for
all the services)
TSP Insured: UBI telematics solutions based on contract
Shows the Business Value Chain when the TSP acts as the solutions provider when services are leased to them by insurance companies
Shows the business value chain when the insurer becomes the solution provider while undertaking services from the TSPs on a contractual basis
7
0
3
6
9
12
15
18
21
24
27
30
2012 2013 2014 2015 2016 2017 2018 2019 2020
UBI
Sub
scrib
ers
(Mill
ions
)
UBI Subscribers NA UBI Subscribers EU
What's the Market Like – UBI Market Snapshot (North America and Europe) With all the commercial UBI programs underway and as consumers become more aware of UBI benefits, installed base is expected to increase post 2016
UBI Market Snapshot : Subscriber Base for UBI (Europe and North America) 2012 - 2020
• Expected foray of newer UBI offerings from insurers along with OEMs (e.g. In North America StateFarm and Ford SYNC; Vauxhall and Ingenie) meeting wide fragmented regulatory needs.
• Increase in UBI uptake expected from increased delivery of value proposition through media and agent channels explaining end user involvement and associated metrics
Note: All figures are rounded; the base year is 2012. Source: Frost & Sullivan
8
Regional Analysis of European UBI Market – Subscriber Forecast Increasing expectations from the consumers side but OEMs realization of killer connected car components is slow and the business model is still weak
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2012 2020
Uni
ts (M
illio
ns)
0.0
2.0
4.0
6.0
8.0
10.0
2012 2020
Uni
ts (M
illio
ns)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2012 2020
Uni
ts (M
illio
ns)
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
2012 2020
Uni
ts (M
illio
ns)
German market is expected to grow from ~ 50,000 in 2012 subscribers to
~ 2.7 Million by 2020
France market is expected to grow from ~ 150,000 in 2012 subscribers
to ~ 3.1 Million by 2020
Italian market is expected to grow from ~ 1.5 Million in 2012
subscribers to ~ 9.7 Million by 2020
UK market is expected to grow from ~ 350,000 in 2012 subscribers to ~ 7.2
Million by 2020
9
OEMs Involvement in UBI - Keen in Offering UBI Solutions OEMs are starting to embed the UBI functionality in their connected car device; Fiat, VW and Ford Europe are joining the race.
OEM Insurance company TSP
Direct Line Group
--
Type of Solution
Expected ?
10
Example of OEM Involvement in UBI – Citroen’s Pure PHYD Program Teletrac’s platform is used to evaluate driving behavior, customers can get 12 months of free insurance as a trial based on driving analysis
Citroën’s C1 Connexion Citroen and Teletrac will provide a free standard fit telematics based insurance solution
A free or discounted insurance is included in the price of the car. The driver will need to watch their safety scores which is provided to them everyday from Teletrac.
Warnings are provided to drivers based on
their driving pattern. If they receive more than 4 warnings throughout the year, the free or discounted insurances stand cancelled
Highlights of Citroen and Teletrac’s UBI Policy
Citroen’s Involvement in UBI
Safety scores for individual vehicles based on speed, cornering, braking, and
accelerating (how driven) is provided
Drivers will have the ability to receive 12 months of free insurance on Citroën’s C1
Connexion insurance Policy
11
OEM Involvement in UBI – GM’s pure Mileage-based Insurance Utilizes OnStar telematics infrastructure to calculate premiums based on odometer readings with a max discount of 50%
Odometer data collected from OnStar is sent back to State Farm approximately 30 days after the insured signs up for Drive Safe & Save
The insured can receive a discount of up to 50% based on the distance they travel
Highlights of State Farm Policy with OnStar
The customer provides permission to use the odometer reading from his or her monthly OnStar Diagnostics report to be forwarded to GMAC Insurance
The insurance discounts are based only on the miles driven
Highlights of GMAC Policy with OnStar
General Motors Involvement in the UBI Value Chain
Odometer readings
Source: Frost & Sullivan
12
Wireless Provider as UBI Solution Provider Telekom-Austria, Docomo, TelIT are few other wireless providers, keen to enter into the UBI market as a solution provider
Wireless Provider Insurance Company Hardware Provider Data Analytics Provider
AIG Insurance, Groupma Scope Technologies Tower Watson
Generali Seguros (Spain) Masternaut Dynamic Insights
(US)
State Farm (Drive Safe & Save program) Hughes Telematics Tower Watson
(US)
Esurance; owned by Allstate (pilot in Arizona); launch in
Texas - Tower Watson and
Agnik Minedrive
Increasing central role of Mobile operators as service integrators with excellence
in B2C relations and customer relationship management.
13
Expected Future UBI Value Chain The future will see involvement from, both OEMs (eCall legislation driven) and mobile network operators (utilizing strong existing B2C relationship)
OEMs to install the hardware in car as a factory-fitted system and are expected to partner with TSP’s for telematics services (telematics services related to vehicle diagnostics, driving behaviour, planned vehicle maintenance, and emission management).
Insurer Insured
Telematics Service Provider (TSP)
GSM Communication Operator
Map Supplier
Hardware Installer
Billing Engine
Database Management
Assistance Operators
Hardware Supplier
OEM Aggregators
Source: Frost & Sullivan analysis.
14
Example : Partner Ecosystem Highlights of Progressive and Coverbox Miles and time of the day driven are the key data points collected by insurers which shows clear focus on reducing premiums of good and safe drivers.
Panel of Insurers
Services Provider
Hardware Device
M2M SIM card Provider
Analytical Tools Insured (Coverbox policy holder)
Panel of Insurance
Companies
Pay for UBI solutions per vehicle per year
Offer data related to UBI and other telematics
services Coverbox
Prog
ress
ive
Insu
ranc
e C
over
box
Insured (Snapshot policy
holder)
Progressive Insurance
Progressive is the single face to its
customers
Wireless Provider
Services Provider
Hardware Device
Data Integrators
Wireless Modem
Source: Frost & Sullivan analysis.
15
Conclusions - Who is expected to drive the UBI market ?
Insurance Companies
Wireless Providers
OEMs
16
Frost & Sullivan Contact Information
Niranjan Manohar Industry Analyst
+91-44-66814128 [email protected]
Industry Analyst Research Manager
Praveen Chandrasekar Programme Manager
+001-248-536-2008 [email protected]
Jeannette Garcia Corporate Communications
+001-210-477-8427 [email protected]
Corporate Communications