December 16, 2015 by Canadian Underwriter
Telematics will “uber-ize” the auto insurance industry, according to the 2016 edition of a usage-based insurance (UBI) global study by PTOLEMUS Consulting Group, a strategy consulting firm entirely focused on connected vehicle services and the Internet of Things.
The 1,000-page telematics insurance market analysis, Usage-based Insurance: Global Study, estimated that by 2020, nearly 100 million vehicles globally will be insured with telematics policies, PTOLEMUS said in a press release on Wednesday.
By 2030, nearly 50% of the world’s vehicles will be insured with telematics policies, generating more than 250 billion euros in premiums for insurers. “With 230 active programmes and 12 million customers, usage-based insurance (UBI) is now a truly global phenomenon that reaches twice as many countries as two years ago,” the release added.
According to the report, there are 10 UBI programs in Canada.
The report, which is based on interviews with 200 executives and seven years of primary research, said that “UBI is becoming a mainstream offer in auto insurance.” UBI is becoming mainstream in the United States and Italy and now represents “25-33% of new business among insurance companies that have made telematics a priority.” [click image below to enlarge]
“Now that ultra low cost solutions are available, being smartphone apps, embedded car devices or aftermarket devices, insurers have no excuse to procrastinate any more,” said Frederic Bruneteau, managing director of PTOLEMUS, in the release. “Like Uber, [UBI] will radically transform the business model of auto insurance, from underwriting to claims management. The days of insurers who rely on purely statistical models are counted,” he argued.
“Auto insurance companies competing without telematics will be hurt by negative customer selection and growing imbalances in their portfolio,” the report added.
Other highlights of the report include:
• The commercial line segment will not pick up the pace and is forecast to only represent an estimated 4% of the total active UBI policies by 2020;
• The number of autonomous vehicles, whether semi, highly or fully autonomous, will reach 380 million worldwide in 2030;
• Autonomous functions/advanced driving assistance systems will have the ability to reduce accidents by 30-40%. Overall, the evolution towards autonomous vehicles will impact losses noticeably in mature markets from 2023 onwards;
• In the most advanced countries, such as Germany, premiums will decrease by 40% between 2020 and 2030; and
• Telematics extension to new insurance lines – home, health and life – will push smartphones to the centre of cross-line strategies. “Insurance companies will integrate telematics data collection into a single, customer-centric app.”