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SECTION I FUNDAMENTALS OF THE UBI MARKET A third one is to provide paid-for value-added services to increase unitary revenues. Allianz in France, the Verein Öffentlicher Versicherer in Germany, and Uniqa in Austria have deployed such models. The fourth one is to switch to mobile and turn the offer to a reward mechanism with small and recurring wins, as we have seen with Discovery Insure. Licence We will evaluate the effectiveness of these strategies and others in Section V. c. The senior driver segment agreement Berkshire Hathaway’s 85 year-old Chairman and CEO, Warren Buffet, said that he is less likely to be involved in an accident than a 16-year-old male because the younger man is “trying to impress the girls”. signed by In fact, the losses generated by older drivers, notably above 75, are often comparable to those of younger drivers. As shown below for Italy, while the frequency of claims remains lower, the severity of these can be very high. AAAA. Reserved for employees of Fig 1.43: Average claims frequency and severity of Italian drivers, by age Claims frequency 20% Claims frequency Average claims cost BBBB Average claim cost 7 000 15% 5 250 10% 3 500 5% 1 750 0% 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 0 Strictly reserved to BBBB The population in the US, Europe and in numerous emerging markets is ageing rapidly, and the premiums increase steadily once drivers reach the age of 60. Yet this is a segment that is never addressed specifically. Generally older drivers do not tailgate or take corners too fast, but can be too slow and miss turns, which is dangerous in a completely different way. employees. Distribution to third Policyholder's age Source: ANIA, PTOLEMUS - Note: statistics for MTPL insurance; Claims cost in Euros parties is prohibited The problem is that, unless set up specifically - and we are yet to see any efforts in that area - scoring algorithms do not regard this as dangerous driving. © PTOLEMUS - www.ptolemus.com - Global Usage-based Insurance Study - January 2016 - All rights reserved Strictly reserved for the internal use of the reader - Distribution to third parties is prohibited 132
SECTION I FUNDAMENTALS OF THE UBI MARKET In fact, today’s insurance telematics does not work for old drivers. The thresholds on breaking and accelerating are tuned to isolate only impatient or aggressive driving. Older drivers do cause accidents, but for different reasons. Also, they drive fewer miles, since many no longer have to commute. The present models of PAYD and PHYD would need to be entirely rethought and the hardware solution would also need to be redesigned to apply for this segment. 4. Some of the challenges ahead Licence agreement We surveyed the responses from the insurers we spoke to during the process and identified the principle motivations and pain points that will be analysed further in the study. signed by When looking at what motivated the companies to start a UBI programme, we found that improving underwriting and risk selection was by far the most common attraction. It was closely followed by the need to acquire profitable customers efficiently. Other gains were the perspective of loss reduction (in Europe and South Africa mostly), improvement in customer relationships and being seen as an innovator. The cost of the device, data analysis and transmission is still too expensive for Russian insurers. Even international companies that have Russian subsidiaries as Allianz, Zurich or Liberty Mutual do not believe in telematics insurance in Russia. AAAA. Reserved for employees of BBBB When looking at the key hurdles in the implementation of a UBI programme, the responders saw reaching profitability a n d gaining customer acceptance as most problematic. Getting the offer’s pricing right and reducing cost came second. Making the technology work, collecting the right data and selling was seen as less of an issue. In fact, the costs of the investments needed were often picked up as the main barrier to development and implementation. It was not highlighted as a prevention to doing business altogether, but as preventing from attracting specific segments and market. Strictly reserved to BBBB employees. Distribution to third As a response, most of the respondents where looking at or already working on sharing those costs with external partners. In practice w e h a v e s e e n t h i s h a p p e n i n g w i t h independent OBD dongle providers and to a parties is prohibited The installation cost is an issue. In Germany, installing the black box costs about €80-100 © PTOLEMUS - www.ptolemus.com - Global Usage-based Insurance Study - January 2016 - All rights reserved Strictly reserved for the internal use of the reader - Distribution to third parties is prohibited 133
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