Canadian Underwriter

How ‘fear and mistrust’ prompted one Calgary insurance broker to launch telematics

March 10, 2015   by Greg Meckbach, Associate Editor

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Telematics technology may not reduce the frequency of auto insurance claims, but it does help reduce severity, reduce insured losses and help brokers provide value-added services to both consumer and commercial customers, speakers suggested Tuesday at the P&C Insurance Technology Conference.

“In general, what’s been seen is that the claims frequency doesn’t really decrease,” with telematics, said Phil Henville, senior vice president of solutions for Quindell plc, of auto insurance losses. “You still get the minor collisions but the claims severity is drastically reduced. So you still have crashes, you still have rear end collisions but you don’t have the fatalities and the total losses.”

Hevnille made his remarks Tuesday during a presentation at the conference in Toronto. 

Telematics in auto insurance was one topic discussed at Insurance Canada Technology Conference

Quindell, based in Fareham, England, is a technology vendor that is currently in a partnership with Independent Broker Resources Inc. (IBRI) to provide telematics technology to auto insurance customers through members of the Insurance Brokers Association of Ontario (IBAO), which owns IBRI.

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Several insurers in Canada currently use telematics to monitor driving behaviour – such as speed, distance, acceleration, braking and cornering – and to set rates based on that behaviour.

For some insurance companies, telematics is about corporate social responsibility, said Blair Currie, vice president of business development at Intelligent Mechatronic Systems Inc., which provides telematics technology insurers including the Co-operators Group Ltd.

“Approximately 15% of claims costs come out through a telematics programs,” Currie told attendees. “I have seen that scale as high as 40%”

For Hugh McTavish, president of Godfrey Morrow Insurance and Financial Services of Calgary – and president of InsureMy Ltd. – telematics was initially about competing with direct writers, he suggested Tuesday.

“Initially it was fear and mistrust that got me interested in it,” McTavish said during a panel at ICTC, titled Broker-Friendly Telematics is a Reality. “Quite frankly, I thought this was a direct writing play. This is something where the insurance company, whether they are a direct writer or not, can actually communicate directly with my customers, have an interaction with my customers and I was uncomfortable with that.”

Earlier this year, InsureMy announced commercial telematics offerings in Alberta and Ontario.

“What I found was that it actually provides more opportunity for me to discuss things” with customers, McTavish said. “There is more data, there are more touch points.”

For brokers, telematics is a way to add value, McTavish added.

“We don’t talk much about price when we are talking about all the things that we provide as a broker,” he said.

Also speaking on the panel was Randy Carroll, former chief executive officer of IBAO, who suggested telematics enables brokers to add value to their relationships with customers.

“If you take a look at a telematics solution and you understand what it does, understand what data it provides, and you understand how you can use that to increase your expertise in risk management, then you are actually getting yourself into an area that you are not firmly in today,” Carroll said. “You are going to get yourself into an area that your competitors that are trying to enter into (but) will have a difficult time providing the same level of expertise that the broker can.”

Telematics can be used for more than just risk management, Henville suggested.

Last August, as part of a trial, IBAO put 105 of Quindell’s devices into taxis in the Toronto area for three months. Among other things, this trial helped fleet managers monitor the amount of time vehicles spent idling, Henville told ICTC attendees.

“Just by the reduction of the idle times and having those discussions with the taxi drivers, the fleet operators were able, on average,” to reduce fuel costs by $2,640 per year, he suggested.

Cabbies’ driving behaviour also improved, he added.

“Telematics is one piece of a bigger puzzle called the connected car and we are seeing the evolution of the connected car,” said Lara Ghaddar, director of sales and business development for IMS. “There is definitely going to be a change to the way the insurance industry looks as we get more services in the vehicle and as we get more autonomy in the vehicle. So one question becomes, where does insurance play a role as more and more (original equipment manufacturers) are taking more liability on?”

Another question is the role of telematics as new aggregators – such as Google Compare – enable customers to buy auto insurance, Ghaddar suggested.

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