Brokers ‘will be inundated with information from different insurers’ about telematics, ORBiT speaker warns

The use of telematics, to set auto insurance rates based on driving behaviour, presents both an opportunity and a risk for brokers, speakers suggested at a recent technology conference for brokers.

“One of the things that you folks have that insurance companies don’t have is a very clear picture of the customer, what their needs and their wants are,” said Patrick Vice, director of information technology at Frank Cowan Company Ltd., a Princeton, Ont.-based managing general agent.

Vice made his remarks Wednesday during a panel discussion at Real Time Days, produced by the Organization of Real-Time Brokers Implementing Technology (ORBiT). “What we are going to see, as telematics are adopted by insurers, is insurers gravitating towards different market segments, without necessarily being able to communicate that effectively to the insureds. Go figure.”

But brokers, Vice noted, “are going to be able to articulate very effectively to the consumers.”

Clinton D’Souza, insurance product manager at Montreal-based IT services firm CGI Group Inc., agreed.

“Brokers eventually have to start to understand this because your policyholders are going to be wanting to question you, how it’s going to work and how the data is transmitted,” said D’Souza, who spoke on the same panel as Vice.

Vice said a broker who knows that a carrier is targetting a certain type of customer with its telematics offering can suggest that carrier to a policyholder.

“You will have to get a good working knowledge of the marketing features that are inherent in the offerings from the insurance companies,” Vice said. “The threat that I see is that you will be inundated with information from different insurers. You will be lost in the mud and not able to take a higher level look at it. There is going to be an awful lot of information that is going to be coming your way that you will have to absorb.”

In Canada, several carriers are using data gathered from telematics in policyholders’ cars, such as speeding, sudden acceleration, hard braking and total distance. Intact, Desjardins, CAA Insurance and The Co-operators, for example, are using telematics to offer discounts to Ontario auto customers.

Telematics can also be used to detect when a vehicle is taken to another province or into the United States, noted Debbie Olson, vice president of product innovations at Fareham, England-based technology vendor Quindell Solutions Inc., who also spoke at Real Time Days.

Quindell, which acquired Toronto-based iter8 Inc. last year, is providing the technology for the Insurance Brokers Association of Ontario (IBAO)’s telematics offering, scheduled to roll out this summer.

Real Time Days was held both in Toronto May 28 and in London, Ont. May 29.

In Toronto, ORBiT president Wendy Watson asked how portable the telematics data is for customers who want to switch carriers.

“You will probably have two sets of data,” said Blair Currie, vice president of business development at Intelligent Mechatronic Systems Inc., a Waterloo, Ont.-based vehicle technology vendor whose products include telematics.

“You are going to have the score data that can travel from one insurance company to another and the various key driving indices. Each insurance company wants to take that and weight it into its own special form.”

Olson suggested the data can be rolled into a score, similar in concept to credit scores. That overall score, rather than the underlying data on which its based, could be shared among providers, Olson suggested.

“Brokers are the ones who need to push something like a score,” she said.

“Telematics allows us to change the way insurance is packaged and sold,” said Paul-Andre Savoie, president and chief executive officer of Laval, Que.-based Baseline Telematics, adding that worldwide, more than 5.5 million policies are being written “with telematics components in them,” in 35 countries.

“Experts assume that within North America, by 2020, over 15% of auto policies will be underwritten with some form of telematics,” Savoie added.