How CAA’s approach to telematics in Ontario differs from Industrial Alliance’s UBI program in Quebec

Telematics technology, or usage-based insurance (UBI), gives auto insurance carriers an opportunity to change drivers’ behaviour and offer additional services such as diagnostics, according to executives from carriers offering or planning to offer the technology.

Industrial Alliance Home and Auto Insurance Inc. of Quebec City introduced its Mobiliz program, aimed primarily at drivers aged 16 to 24, in 2012 in Quebec.

“The theory was that we re-thought the insured-insurer relationship,” said Michel Laurin, president of Quebec-based Industrial Alliance Auto and Home Insurance, during a keynote speech Tuesday at Insurance-Canada.ca Inc.’s 12th Annual Property & Casualty Insurance Technology Conference in Toronto.

Industrial Alliance sends its Mobiliz customers an e-mail every Monday telling them how well they drove over the previous week. It includes a map, generated by Google Maps, showing locations where they were driving more than 18 kilometres per hour over the posted limit, as well as incidents of sudden acceleration and hard braking.

Usually, Laurin suggested, insurance carriers communicate with their customers once a year, upon renewal.

“This is the first time, I think, that we came up with a different approach to communicating back and forth with our customers on a more continuous basis.”

Another carrier, CAA South Central Ontario, plans to launch UBI early this year.

“Regular feedback on driving habits will be provided to the consumer on a daily basis,” said Robin Joshua, director of corporate underwriting and risk management for CAA Insurance Company, during a different session at the Insurance Technology Conference.

“Also there will be tips provided to improve driving behaviour. We expect this will provide drivers with a look at their driving habits. They may not be aware of these driving habits and if they follow the tips then their driving habits will result in savings.”

With Mobiliz, Industrial Alliance gives its applicants a quote based on age, gender, postal code and vehicle. After the first month, rates do not change but after the second month, rates can be reduced by up to 25% – or they could double – depending on behaviour, Laurin said.

The provincial government in Quebec allows auto insurers to add surcharges for bad driving behaviour.

“Some don’t care,” Laurin said of Mobiliz customers. “They pay the surcharge. That’s an underwriting issue but for the most part they are looking to get to the 25% discount.”

About 80% of Mobiliz users are getting a discount, Laurin noted.

“When they compare themselves to the community, they want to beat the community,” Laurin said, commenting in general on Mobiliz customers.

He noted Industrial Alliance compares its Mobiliz customers’ speeds with the limits on Quebec roads.

“We do not just have a threshold that says ‘Over 120 km per hour you will be penalized,’” he said.

Every Monday, customers get a “dashboard” indicating incidents of speeding, and can get discounts of up to 15% of they do not speed. They can also get discounts of 5% each if they have no incidents of hard braking or sudden acceleration.

For its part, when CAA launches in Ontario, customers will get a 5% “participation discount,” as well as “basic vehicle diagnostics and the opportunity for further discounts of up to 15 per cent on renewal as a result of good driving behaviors,” the company stated in a press release last November.

“We are trying to understand, how can we connect with traffic reports and provide you a better route to get you where you are going?” Joshua said Tuesday. “Those types of things are additional features that you can build in to your telematics offering.” He made his comments during a panel discussion at Tuesday’s conference.

Attracting customers initially is not a problem with telematics, Joshua suggested.

“Progressive and Desjardins have proven that volume can be driven,” Joshua said. “It’s how you hang on to them. There has to be some value-driven features that allow you to hand on to that particular consumer. You have to have some sort of hook, because eventually that volume will dry up.”

After the morning keynote, one audience member asked Industrial Alliance’s Laurin how close the firm is to meeting its objective of breaking even on its Mobiliz.

“Not yet,” Laurin replied. “This is a long term process. We have invested a lot of money in there. We want to get that business to break even but we are looking at a five- to 10-year period.”

With Mobiliz, Laurin noted, premiums are not based on claims history.

“Your future will be different from your past, because we will make you aware of behaviour that will lead to accidents,” he said. “We are forgetting what you did before and having trust in you to do different things behind the wheel than you used to do, because we will be there to have you learn to drive better.”