May 7, 2014 by Greg Meckbach, Associate Editor
JASPER, ALTA. — Officials with the Insurance Brokers Association of Ontario (IBAO)’s telematics subsidiary have discussed usage-based auto insurance with the Alberta regulator and are urging Alberta’s brokers to tell carriers that brokers need to have access to policyholders’ telematics data.
Colin Simpson, chief executive officer of IBAO subsidiary Independent Broker Resources Inc. (IBRI), noted Tuesday that Alberta is “a little bit behind” Ontario in rolling out telematics-based auto insurance.
“Certainly in Alberta we have reached out to the regulator three or four months ago and opened up the dialogue,” Simpson said during a presentation at the Insurance Brokers Association of Alberta (IBAA) convention at Jasper Park Lodge.
Auto carriers wanting to base their premiums in Alberta on telematics data require approval from the province’s superintendent of insurance, Mark Prefontaine. In an interview last month, Prefontaine told Canadian Underwriter that he intends “to have a decision made within this calendar year” on whether the province will approve rates based telematics.
“It is something that we are seriously considering,” Prefontaine said at the time.
Meanwhile, the Financial Services Commission of Ontario (FSCO) has approved auto insurance rates where carriers including Intact, CAA and The Co-operators are offering discounts for good driving behaviour. Unlike in Quebec and Britain, Ontario carriers are not adding surcharges for risky driving behaviour.
“Certainly Ontario is …. very similar to Alberta …. in that the regulator is between a rock and a hard place,” Simpson said Tuesday. “They understand the benefits of the education, of the road safety, but they are stuck with regulations that they have to adhere to.”
Though Alberta is behind Ontario, telematics “will come and it will come quickly,” Simpson added.
IBRI plans to offer two broker-owned telematics products in Canada. One scheduled for rollout this summer will be offered in partnership with Quindell Portfolio plc, a Fareham, England-based technology vendor. IBAO announced Tuesday that IBRI’s telematics partnership with Quindell — originally announced in September, 2013 — has “two pilots live in the marketplace today.”
Then IBRI also announced Tuesday it plans – in partnership with British telematics insurance broker Ingenie Services Ltd. — to offer a “niche telematics product for 16-24 year olds,” distributed exclusively through IBAO members. Ingenie’s majority shareholder is Quindell, which agreed in January to buy the 43% of Ingenie shares that Quindell did not already own.
Ingenie’s founder and chief executive officer, Richard King, also addressed the IBAA convention Tuesday. King said he wants to “Canadianize” Ingenie’s service. If approved by FSCO, Ingenie will launch later this year, King noted.
In Britain, where Ingenie targets young drivers, it installs telematics devices, monitors the vehicles and then gives the policyholders a driving score out of 100. Provided they drive at least 40 miles, Ingenie updates the driving score roughly every 10 days, giving drivers feedback on speed, acceleration, braking and cornering.
Ingenie collects data 10 times per second, King noted.
“We continually capture data about how that car is being driven,” he said. “About twice a minute we pump all that data … and we run about 200 algorithms against that data.”
Brokers should get access to such data, Simpson said during his presentation to the IBAA members.
“You need to explain to (carriers) that you have to have access to that data,” Simpson said, illustrating his point with an example of a client who buys usage-based insurance through a broker.
“We all know what’s going to happen,” Simpson said. The client “is going to come back in the office and say, ‘This product stinks. You said I could get up to 25% off but all I am getting is 5% off. You sold me something that doesn’t work.'”
Unless the broker can get access to that data, he or she is going to have to tell the client, “Sorry, I can’t see your data. I don’t know why you are only getting 5% instead of 25%,” Simpson warned.
But under IBRI’s telematics model, customers essentially can take their telematics data from one insurer to another, while IBRI provides the infrastructure to support the carriers’ telematics offerings.
“We have designed an infrastructure that will facilitate a centralized service, that brokers can utilize, that insurance companies can utilize and that consumers can utilize,” Simpson said. “It does not in any way take away from insurance company’s ability to compete on product. This is just infrastructure that provides process.”
For example, Simpson suggested, the IBRI system would collect data on each policyholder’s on incidents of hard braking but it would be up to each carrier to decide exactly whether to use that data to adjust rates.