This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
Mass telematics adoption
Matteo Carbone
@mcIns_
Has anyone asked what the customer wants?
London, June 28
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 2 MIL
mass telematics adoption v1
The background of the thoughts I will share with you today
Principal @ Bain & Company
• Financial Service and Digital Practices
• 12 years strategic consulting experience
• Focused on insurance and innovation
Insurtech Influencer
• Speaker and writer on insurance innovation
• Insurance Thought Leader
• Top 50 InsurTech Influencer
Founder of Connected Insurance
Observatory
• Responsible of the Observatory on Telematics, Connected Insurance and Innovation
• Advisor of more than 50 international players on Insurance IoT
50
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 3 MIL
mass telematics adoption v1
I founded a think thank focused on Insurance IoT
Insurers
30 Insurers part of Insurance Groups representing 66% of
the P&C Italian insurance market
Reisurers
3 primary International Reinsures30 3
Aiba Appian Aubay DigitalTechBelron Guidewire
IRSA SYSDATAPortolano Cavallo
Studio legale
Vodafone AutomotiveInfoblu Octo Telematics
More than 45 players joined the first edition of the Observatory
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 4 MIL
mass telematics adoption v1
Customers More than 4 Millions of
Italians have an insurance black boxes
fitted in the cars
+4 Penetration Telematics represent 16% of the auto insurance contracts sold and renewed at Q4 '15
16%
Best practice One of the main Italian
insurance Groups reached a penetration greater than 40% on
his auto insurance portfolio
>40%
Source: Bain estimations based on "Observatory on telematics, connected insurance & innovation" data
Insurers 26 Insurers are offering a motor third part liability cover telematics based on the Italian market
26
Car insurance telematics is already mainstream in Italy
65% NOW!
65% of the Insurers at the Connected Insurance Observatory have already seen a material impact of telematics on the Italian auto insurance market
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 5 MIL
mass telematics adoption v1
Consumers aren't concerned of data security
Source: Bain elaboration on "RCA e black box: analisi degli acquirenti", Sergio Desantis. Connected Insurance Observatory
Telematics penetration
Age
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 6 MIL
mass telematics adoption v1
Source: Bain elaboration on "Clausole sulla Black-Box: trend temporali e canali di selezione/controllo dei rischi", Marco Cosconati. Connected Insurance Observatory
Telematics penetration
MTPL premium level(€) Mln cars
Consumers aren't concerned of data security
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 7 MIL
mass telematics adoption v1
Consumers decide what happens to their data, but they are interested to save on car insurance
MTPL + theft (discounted) + black box
MTPL (discounted) + black box
When the increase of value is positive and material, there is an
effective use case for the client and a selling speech for the distributor
Surce: Connceted Insurance Observatory
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 8 MIL
mass telematics adoption v1
OUTSOURCING
POSITIVE
IMPACT OF
TELEMATICS
ON BOTTOM
LINE
• Ability of box to:
- auto-select risks
- Lower the theft
• Efficiency of information usage in the claims handling process (based on claims detection and claims reconstruction)
•Usage of TSPs allowed to:
- achieve relevant quick wins with limited investments and limited impact on the system
- have direct access to innovation
• Effectiveness of the commercial act which is maximized by:
- Visual effect of the reach of the RCA discount
- Explicit fees paid by the client
• Remuneration to the intermediaries
The telematics data usage creates concrete value on the insurance value chain
Traditionallifetimevalue
Benefits forinsurance
bottom line
Services & assistance
rate
Customerdiscount
TSP
Lifetimevalue
telematics
CompanyLTV
• Distributor
Telematics business case
1
1
2
3
5
2
3 5
4 4
Intermediary
INTERMEDIARY
COMMITMENT
Business case based on value sharing both with the clients and the intermediaries
Additional fees
Surce: Connceted Insurance Observatory
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 9 MIL
mass telematics adoption v1
Telematics benefits on the insurance bottom line
RISK SELECTIONMTPL claims frequency
-20%
Surce: Connceted Insurance Observatory
LOSSCONTROL
-11% material damage costs
-18% body injuries incidence
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 10 MIL
mass telematics adoption v1
Partnership with third parties allow the creation of a wide spectrum of services telematics based
Source: Bain Observatory on Telematics, Connected Insurance & Innovation
Weather alert based on geo-localization
5
Antitheft service if the box registers a different-than-usual driving
style
3
"Live" concierge supporting navigation
1
Alert if the vehicle exits a "safe area" (or enters an
"unsafe area") of the city, defined by the client
(e.g. parental control options)
4
Alert in case speed limits are
exceeded
2
Highway/ parking area tolling
6
While driving
In case of crash
When parked
Road or medical
assistance via dedicated button
7
Simplified claim notification,
including automatic form fill-
in based on telematics data
8
Damages Photo
Claims feature
Claim certification
at client's disposal
Automatic assistance to the client on
the premises in case of severe
accident 9
10
11
Client assistance and personalized
case management in case of crash
Parking localization
Street sweeping
alerts
Alert if the car is hit when
parked
Antitheft service if the box is removed/
uninstalled
Alert in case the vehicle is moved when the
engine is off (e.g.
tow-away)
14
15 16
13 12
Stolen veicle recovery
17
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 11 MIL
mass telematics adoption v1
Ecosystem of partners to create engaging touchpoints and sustainable business cases
Economics auto telematics
Traditional lifetime value
Partners contribu-
tions
Discounts/cash back to the client
Fee for ecosystem of partners Fee for the intermediary
Lifetime
value
telematics
LTV for the Company
Benefits on the
insurance bottom line
Additional fees
Weather alert based on geo-localization
5
Antitheft service if the box registers a different-than-usual driving
style
3
"Live" concierge supporting navigation
1
Alert if the vehicle exits a "safe area" (or enters an
"unsafe area") of the city, defined by the client
(e.g. parental control options)
4
Alert in case speed limits are
exceeded
2
Highway/ parking area tolling
6
Road or medical
assistance via dedicated button
7
Simplified claim notification,
including automatic form fill-in based
on telematics data
8
Damages Photo
Claims feature
Claim certification
at client's disposal
Automatic assistance to the client on
the premises in case of severe
accident9
10
11
Client assistance and personalized
case management in case of crash
Parking localization
Street sweeping
alerts
Alert if the car is hit when
parked
Antitheft service if the box is removed/ uninstalled
Alert in case the vehicle is moved when the
engine is off (e.g.
tow-away)
14
1516
1312
Stolen vehicle
recovery
17
The insurer can keep more value with use cases based on a broad suite of services and rewards
Surce: Connceted Insurance Observatory
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 12 MIL
mass telematics adoption v1
Connected insurance market adoption requires defined sequential steps
Surce: Connceted Insurance Observatory
Incubation phase
Growth phase
Maturity phase
Exploration phase
Learning phase
Which is the
best way to do it
for my
company?
Does the
approach make
sense?
There is a
ROI of the
use case”?
• First pilots focused on pricing
• Roll out on few pioneers
• Pilot phases diffusion over the greatest part of players, by using a "me-too" approach
• Only few top players understand telematics full potential (UW, claims, VAS), define their own approach (eg: big data) and push the selling phase
• Commercial offer differentiation
• Telematics potential fully understood and increased commercial push by all players
• Differentiating solutions / providers over top players
• Telematics approach is the standard for the auto insurance business
• Relationship consolidation between top players and providers, best practices cross-country diffusion
DE FR SPACAN US
ITA
UK ZA
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 13 MIL
mass telematics adoption v1
The lack of a clear strategy limit the achievement of the full potential of the telematics
4
5 TelematicsValue
Creation
Loyalty and "behaviors
modification"
Loss Control
Risk-Based Pricing
Value-Added Services
Risk selection
1
2
3
Costs
Data management complexity
Privacy
Lack of a clear strategy
Barriers to the telematics development
11%
34%
22%
34%
Surce: Connceted Insurance Observatory
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 14 MIL
mass telematics adoption v1
Telematics is a journey, not a destination
Connected Insurance strategy
Value proposition
What strategic goal to achieve by introducing connected insurance?
How to position the product within the current product offer? What target client to reach?
Hardware and
operating model
• Which user experience at sales point?
• What pricing approach to introduce at underwriting and
renewal?
• What services and loyalty systems to include in the product?
• How to leverage the communication channel with client?
• Which data and how structure the data gathering
approach?
• What devices and which delivery user experience?
• How to evolve processes to strengthen the effectiveness of the
impacted Company functions? (e.g. claims, actuarial, UW, …)
• How to capitalize on the cumulated experiences and activate a
path of continuous improvement?
Surce: Connceted Insurance Observatory
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
Matteo Carbone [email protected]
+393346220378
@MCins_
Matteo Carbone, 28 April 2016