PTOLEMUS Consulting Group

Growth analysis and major trends in the European UBI market

SMi’s Telematics for Usage-Based InsuranceConference

London – 18th February 2015 - PTOLEMUS intellectual property

PTOLEMUS

PTOLEMUS in a nutshell

We help all players in the mobility ecosystem

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ITS operators & regulators Fleets

Fleets

Mobile device & positioning suppliers

Telecom operators Automotive OEMs & suppliers

Financiers

2012 Directors’ report

(translation from the Italian original which remains the definitive version)

Financial Statements of the Company and the Group at 31 December 2012

27 March 2013

Legal and Administrative Office: 20121 Milan - Foro Buonaparte, 44

Fully paid-up share capital € 314,225,009.80 Tax Code and Milan Company Register no. 00931330583

www.itkgroup.com

Insurers, aggregators & assistance providers

Content & application providers

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Telematics solution providers

PTOLEMUS 3

The Internet of Things affects many insurance lines

The car’s connections to other nodes and networks

Source: PTOLEMUS

e-health (V2P)

Retail

Digital home

Smart Grid (V2G) Smart City

Road network V2I, V2V, ETC

Infotainment application integration

Future device environment - Macro-trends 2

PTOLEMUS 3

Major trends that insurers must take into account

Major trends

Smartphonisation

Massification

Diversification

Autonomous car

Car as a Service

Integration with claims

Big data management

Connected vehicle integration

New entrants and models

PTOLEMUS 3

We will focus on these 5 trends

Major trends

Smartphonisation

Massification

Diversification

Autonomous car

Car as a Service

Integration with claims

Big data management

Connected vehicle integration

New entrants and models

PTOLEMUS Source: PTOLEMUS

Smartphone-based offer is becoming the norm, first as a pre-quote rating tool

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• Wunelli partnered with SSP for smartphone based UBI

- 1,000 Brokers will be able to obtain a quote via SSP systems from a panel of Soteria Drive insurers

• Other Wunelli-backed insurers, the AA, AXA and Co-operative have also launched their application

• Aviva has launched its own application

- For customers with premium above £400, discount can reach up to 20% (Score over 7.1)

• So has Direct Line with discount of up to 10%

5Trends and growth factors - smartphonisation

PTOLEMUS

Smartphones are the form factor of the future for UBI

• 3M driving assistance app

• 75% penetration: reach mass scale and new segments

• More sensors than a black box (The Floow uses 9 of them)

• Use as a universal interface, data hub or tracking device

• Feature pilots include customer service, billing, payment, claims...

• Can also complement other devices

• Hybrid solution will rapidly calibrate smartphone algorithms

• 80% of what black boxes do

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Accelerometer

3-axis gyroscope

Glonass

Barometer

Proximity sensor

Light level Touch screen

Camera(s)

GPS location & timeWiFiNFCBluetooth

iBeacon

Magneto-meter

4G connectivity

Microphone

Voice & messaging communication

Fingerprint sensor

A smartphone brings more sensors than a black box

Trends and growth factors - smartphonisation

Source: PTOLEMUS, The Floow

PTOLEMUS

Total volumes of new policies sold by device type - OEM & aftermarket (million)

Source: PTOLEMUS UBI market forecasts

The EU5 device market will become more fragmented...

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Mutation of device form factors - Market uptake 5

EU5

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2

4

6

8

10

12

14

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2012 2013 2014 2015 2016 2017 2018 2019 2020

EU5- Volumes of policies sold by device type (million)

Line-fitted systems

Smartphones

Dash cameras

Windscreen devices

Self-install OBUs

Professionally-installed OBUs

Cut-down OBD dongles

Rich OBD dongles

PTOLEMUS

• Easy to develop - Standard cars API for all brands, standard OSs (Android, iOS, HTML5, Genivi, etc.) and SDK

• Quick to market - Move dev timing from 4 years to 4 months. Set-up & update over the air, using smartphone‘s virtualization

• Rich functionalities - Richer car APIs (command & control), standard home API, city API, health API, wearable API…

• Supplier & customer agnostic - Standard app or white label app to be customised, no tie-in with suppliers

=> OAA will disrupt today’s connected service value chain

Android is creating a smartphone-based data collection standard for the car industry

2 mainstream car makers

Chinese OEMs

3 luxury car OEMs

Key factors to attract apps developersOEMs that did not signed the OAA agreement

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Trends and growth factors - smartcar

PTOLEMUS Source: PTOLEMUS, Renault

Renault is the fist car manufacturer to build partnerships with a panel of insurers and to provide different UBI models

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Renault's approach to telematics

Trends and growth factors - smartcar

Based on its R-link telematics platform, Renault offers 3 partnerships models to insurers:

• B2B model offering access to R-Link data to any insurance company wanting to provide UBI under its own brand

• A co-marketing model where the data is used in the same way but the branding and communication is shared between the 2 brands

• A white label model where Renault sells telematics insurance under its own brand with an insurance company providing the underwriting only

Renault’s projection is to have 200,000 R-Link equipped cars on the road by the end of 2014, and 2.3 million by 2020

Amaguiz chose the co-marketing model for its PAYD product

PTOLEMUS

Annual global connected car sales by connectivity type (million units)

Source: GSMA, Exane BNP Paribas estimates

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We expect embedded solutions to gradually become dominant

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Trends and growth factors - smartcar

PTOLEMUS Source: PTOLEMUS

From the US come new models but also new dangers

• New dedicated channel players: OEM, bCall, Claims, Aggregators, Actuarial & data houses

• Upcoming disruption from the 2 giants- Google will enter the insurance market- Google could acquired an “Indy Dongle”and

integrated its offer with its aggregator capabilities- Apple adds sensors to its iPhone every year- Apple has patent to provide e911 calls

• A large number of well-funded B2C2B start-ups have emerged: Automatic, Mojio and Zubie

- Started to offer a "free" channel to market to insurers

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3Trends and growth factors - new models and changing ecosystem

Insurers and service providers

will need to keep a close watch on how this market evolve

and be ready to partner with an

adapted offer

PTOLEMUS

Early partnership in the UBI ecosystem

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• Wide range of functions and price

• Independent dongle providers can become aggregators

- 2-side model: VAS + UBI sales channel- Access to car + driver data - Natural data custodian

• They will require a simplified rating process - ex: Progressive’s 3 criteria

• Mobile operators are potential allies but their commitment needs to be validated

• Car sharing transforms the car into a service

- Insurers will need to provide specific covers

Indy dongles are rapidly finding a place in this market

Trends and growth factors - new models and changing ecosystem

PTOLEMUS 14

Key factors

We expect over 100 million UBI customers worldwide by 2020

Source: PTOLEMUS UBI Global Study

Global motor insurance premiums from telematics (€ in millions)

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10 000

20 000

30 000

40 000

50 000

60 000

2012 2013 2014 2015 2016 2017 2018 2019 2020

UBI premium generated - Total market - Worldwide

EuropeNorth AmericaAsia - PacificLATAMAfrica

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• Global increase in online insurance

• Regulatory mandates such as Contran 245, ERA Glonass or eCall

• More connected services and vehicle leading to better optimisation

• Chain reaction from the first leader

• Since Progressive all US insurers have a UBI product

• Since Industrial Alliance, 6 other insurers have followed in Canada

• A new programme every 6 month appears in Germany

• Generali has announced 2 UBI trials in Brazil

• 2 brokers announced UBI programmes in the same month in Australia

Trends and growth factors - the market opportunity

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5

10

15

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2012 2013 2014 2015 2016 2017 2018 2019 2020

FranceGermanyItalyUKRest of EU 27RussiaRest of Europe

New telematics-enabled policies (in millions)European personal line market

PTOLEMUS

Conclusion

UBI is heading towards the mass market. How to avoid becoming redundant by telematics newcomers?

Thank you!

• Insure you have solid and reliable app’s development capabilities

• Produce individual and family insurance plans using pervasive connectivity

• Migrate all insurance customer services on multi-device platforms

• Reinforce internal IT system and data analytics to truly leverage telematics-based insurance data

• Constantly monitor the telematics architecture’s evolution

• Develop strong affinity partnerships with car makers, automobile clubs, dealerships and other types of devices

• Export UBI model outside the car to other connected “Things”

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PTOLEMUS Consulting Group

S t r a t e g i e s f o r M o b i l e C o m p a n i e s

Brussels - Boston - Chicago - Hamburg - London Milan - New York - Paris - Viennathomas@ptolemus.comwww.ptolemus.com@PTOLEMUS

Thomas Hallauer, Research Directorthallauer@ptolemus.com+44 7973 889 392 

PTOLEMUS

PTOLEMUS in a nutshell

Who we are

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• The 1st international strategy consulting firm specialised in telematics and location-based services

• Strategy combined with real industry expertise and operational experience

• A focus on achieving results for our clients

• Close links with the mobility ecosystem

• Presence in 7 countries - Austria, Belgium, France, Germany, Italy, the UK & the US

from Ptolemy, the Egyptian savant who built the 1st

map of the world in the 2rd century

• Over 20 consultants bringing 160 years of aggregated experience in telematics, geo-location & mobility

• 50 assignments completed in last 5 years

• Over $1 million revenues in 2014

PTOLEMUS

PTOLEMUS in a nutshell

An international management team

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Brussels Frederic Bruneteau, Managing Director

• MS. HEC Paris, MS. CEMS University of Cologne• Background: TomTom, Vodafone, Arthur D. Little, BNP Paribas• Specialties: LBS, telematics (eCall, UBI, etc.), mobile networks

Frederic Lassara, Senior Expert

• MSc. Management, Marseille Business School, Bachelor of Laws, University of Aix-Marseille & IHEDN

• Background: PSA Peugeot Citroën, Covisint, Datops• Specialties: Automotive, telematics

Chicago Valerie Shuman, Senior Expert

• BA with highest honors from the University of Michigan• Background: Navteq, Ygomi, CVTA, SEI, Verety• Specialties: Connected vehicle services & content

London Hamburg Meinrad Zeller, Senior Expert

• MS Mathematics & Computer Science, Univ. of Göttingen• Background: TomTom, Philips Automotive, Philips Semiconductors• Specialties: Automotive telematics & electronics

Milan Sergio Tusa, Associate Partner

• MBA ISIDA Palermo & Law degree, Palermo• Background: Magneti Marelli, Cobra, Nokia, Tele Atlas, Philips• Specialties: Telematics, automotive, mapping

Alex Willard, Director, Global Technology Practice• BSc. Engineering & Naval Architecture and MSc. Systems

Monitoring & Diagnosis, Southampton City University• Background: Lysanda, MSX International, Ford, Roush Tech.• Specialties: Fleet telematics, car monitoring tools

Boston Eric Pite, Associate Partner

• M. Eng., Telecom ParisTech & MBA, London Business School• Background: TomTom, Motorola, Sendo, Sagem• Specialties: Consumer electronics, connected vehicle services

Thomas Hallauer, Research & Marketing Director• BA, International Business, Southbank University London• Background: Mobile Devices, Telematics Update• Specialties: UBI, location-based services

Maria Grazia Verardi, Senior Expert

• MSc. Physics, Bologna University• Background: Cobra Automotive, Delta Electronics, Ylum• Specialties: Telematics, automotive, R&D in ITS

Vienna Marijan Mumdziev, Senior Expert

• PhD Computing, Univ. Vienna & MBA Univ. Minneapolis• Background: Deutsche Telekom, Nokia Siemens, Telekom Austria• Specialties: Mobile telecoms, UBI

Paris

New York

PTOLEMUS

PTOLEMUS in a nutshell

PTOLEMUS is the first strategy consulting firm focused on telematics and geolocation

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Strategy definition

Vision creation, strategic

positioning, business plan development,

board coaching & support

Investment assistanceStrategic due

diligence, market

assessment, feasibility study,

M&A, post-acquisition plan

Innovation management

Value proposition definition, product

& services development,

architecture design, assistance to

launch

Business development

Partnership strategies,

detection of opportunities, ecosystem-

building, response to tenders

Our consulting services

Procurement strategy

Specification of requirements &

tender documents, launch of tenders,

supplier negotiation & selection

Implementation

Deployment plans, complex / high risk project & program management, risk

analysis & mitigation strategy

Usage-based charging PAYD / PHYD insurance, road charging / electronic tolling, fleet leasing & rental, car sharing, Car As A Service, etc.

Telematics & Intelligent Transport SystemsADAS, connected vehicle, crowd-sourcing, fleet

management, eCall, bCall, SVR, tracking, vehicle data analytics (OBD / CAN-bus), VRM, V2X, xFCD

Positioning / Location enablement

M2M & connectivity

Our fields of expertise

Car infotainment & navigationConnected services (Traffic information, fuel prices, speed

cameras, weather, parking, points of interest, social networking), driver monitoring, maps, smartphone

integration, smartphone-, PND- or embedded navigation,

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PTOLEMUS in a nutshell

We just published the Usage-Based Insurance Global Study, the most comprehensive report written on the subject

• 800 pages of in-depth analysis on the UBI market based on - 200+ interviews in 25 countries- 3 years of research performed by 6

consultants in 4 countries- The learnings from 15+ consulting

assignments for insurers, OEMs, TSPs, investors, etc.

- Our experience & vision of the ecosystem incl. OEMs and TSPs

- 350+ figures (charts, tables, etc.)- 60 relevant patents listed

• Case studies & learnings from ALD Automotive, Autoline, Allianz, Amaguiz, Carrot, Coverbox, Discovery Insure, Generali, GM OnStar, Hollard Insurance, Ingenie, Insurethebox, LeasePlan, Liberty Mutual, MAIF-MACIF, Norwich Union, Octo Telematics, Progressive, Solly Azar, Quindell, State Farm, Unipol, Uniqa, UK aggregators and Google, Young Marmalade, Zurich

• Detailed profiles of - 20 insurance markets- 20 leading UBI insurers

• A handbook of 45 suppliers' solutions including our own evaluation & ranking

• 10-year market forecasts - Country's readiness to telematics- Forecasts for the Canadian, US, Latin

American, European, Russian, African, Indian, Chinese and Japanese markets

- Personal line / commercial line- Aftermarket / OEM

• Insurer's telematics market model results in 5 markets

• A complete set of recommendations to carriers, TSPs, OEMs, MNOs and governments

• A strategic analysis of the value chain evolution including - The impacts of EOBR, eCall, CONTRAN 345,

ERA Glonass, the Monti law, the gender ruling, etc.

- The impact of the smartphone- Managing Big Data

The global reference report on the subject, quoted by

The Economist, the Financial Times and The

Wall Street Journal

Note: A free 100-page abstract can be downloaded from www.ptolemus.com/insurance