Canadian Underwriter

Why this broker takes exception to usage-based auto insurance app

June 19, 2018   by Greg Meckbach

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Usage-based insurance has raised the profile of insurers on consumers’ electronic devices, and this could be bad news for some brokers.

Several auto insurers are using UBI to offer discounts based on data gather from telematics. That technology lets insurers gather data from the insured vehicles, such as distance, location, speed, sudden acceleration and hard braking.

Intact Financial Corp., for example, has made a mobile app dubbed My Driving Discount. Customers can install the app on their wireless cellular devices. It generates a view of a road map of each trip they take, including any events – such as hard braking or sudden acceleration – that could be indicative of risky behaviour.

“One thing I think UBI brought to the insurance industry is that it brings us into the thing that is probably the most important tool that people have in their life and it’s their [wireless] phone,” Louis Gagnon, Intact’s president of Canadian operations, said June 13 at the Property and Casualty Underwriters Club CEO Luncheon, held at the Hilton north of Toronto City Hall.

“As a brokerage we take exception to the telematics [mobile app] because it competes with our marketing message,” said Adam Mitchell, principal of Whitby, Ont.-based Mitchell & Whale Insurance Brokers Ltd., also during the PCUC Luncheon.

Say you are a motorist, your broker is Mitchell & Whale, your insurer is Intact and you are using My Driving Discount.

“When you drive you have to go into the app, you see [Intact’s] brand,” Mitchell explained. But meanwhile, Mitchell added, “I am trying to keep the relationship with you as my customer – because I might move you from Intact and Economical and RSA and so on.”

This has the potential for a “marketing war” – on a customer’s smart phone  – between a broker and a carrier, Mitchell suggested.

“We are all fighting for the eye of the customer and ear of the customer, the attention span of the customer, whether they are on their phone or not,” Mitchell said.

Along with Urs Uhlmann, chief executive officer and country manager for XL Catlin’s Canadian branch, Mitchell and Gagnon were asked during the luncheon about technologies disrupting the insurance industry.

“It’s funny, but I don’t see UBI as a disruptor,” Gagnon said.

The “ultimate objective” of telematics “is to make sure people have feedback on a constant basis, that they receive information on the way they drive,” Gagnon added. “Sometimes it’s related to a discount. Sometimes its simply related to information – where they should go, where they should park their car.”

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4 Comments » for Why this broker takes exception to usage-based auto insurance app
  1. Karan Bhasin says:

    UBI is great – especially when drivers feel they are not being “rewarded” for their good driving. This gives the opportunity to show the insurer exactly what kind of driver you are. When you drive well under this program, the policy UBI discount will increase!
    As a home & auto insurance broker that’s how I pitch it to my clients, who take a liking towards it

  2. Frank Cain says:

    I appreciate and understand the broker’s need for prominence in a world where the commonality and overtness of one on one has been replaced by a .com-type of communication, spreading even further apart the once close connection of broker and client. But I also firmly believe that the use of telematics has provided the opportunity for premium savings not otherwise available unless complicated by the process of having another insurer retrace the steps of acceptability and only to find a guide rule requiring a higher amount. Most users of cell phones are already separated from the outside world by their hunger for and gratification of the immediacy and convenience of communication. I doubt very much if little, with the exception of a premium decrease, will distract them.

  3. Lorien Q says:

    This is why CSIO should develop a telematics app where the data can be collected by a neutral party, then the results of that data collection shopped by the broker in the traditional fashion.

  4. UBI has been a great asset to my brokerage. Increased my retention, clients find it interesting as its a new modern take on giving the best drivers the best discounts. If brokers don’t start accepting technology & innovation by merging it into our current systems we will be left behind when the next big disruptor hits the market.

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