Telematics – Developments in the Automotive Claims Industry

Dr. Richard J. Nathschlaeger

FIAR - 2014

Do you know what:

PAYD

PHYD

UBI

mean ?

This is, what they mean and will mean:

PAYD – pay as you drive !

PHYD – pay how you drive !

UBI – usage based insurance !

4

Cars connected – future opportunities

Vehicle

Diagnostics

SMR

COLLISION NOTIFICATION

Navigation /

Routing Display

Real-time Traffic

& Traveler

Information

Display

Driver Comfort and

Convenience

Active Safety

Vision Enhancement

Rear-end Collision avoidance

Adaptive Cruise Control

Road Departure Warning

Less Accidents

Connected cars will be disruptive to automotive and insurance processes

Driver Behaviour

Analysis

Insurance

Telephone and

Internet Access

(Automated

Transaction)

E-CALL

OEM-CALL

FNOL

5

210 million connected cars on the road by 2016 (est.)

80% of sold cars (Market penetration: units)

Canada

USA

West EuropeEast Europe

Asia

South America

Middle East

& Africa

CAGR: Compounded Annual Growth Rate / Source: ABI Research, Oliver Wyman-Analyse

Development of cars connected

6

• EU regulation: Ecall on-board systems in ALL new cars by 2015

results in mandatory provision of IT-infrastructure for data collection

• device will need to contain a GSM module and a GPS or Galileo chip set

• move towards in-vehicle integration, driving the value of this market to a multi billion Euro

level.

EU-MARKET SITUATION AND CHALLENGES

eCall system

Ecall transmitts Minimum Data Set (MSD)

• Vehicle Identification

• Time of collision

• GPS positioning

• Driving Direction

• eCall Status

• Type of Motoring

)

7

CURRENT MARKET SITUATION AND CHALLENGES

- OEMs focusing efforts on avoiding

accidents

- Active safety is priority for OEMs

- Consumers prefer safe cars

- Number of accidents will decrease in the

future

TODAY -20% accidents

2020 GOAL NO INJURES

Emergency

brake systemEg. BRAKE ASSISTANCE SYSTEMS

ACC (Autonomous Cruise Control)

ACC incl. Full auto break

Driving Assistance

ACC incl. presense side assistance

ACC incl. Front Assistance)

ACC incl. Adaptative Break Assist.

Intelligent Brake Assistant

8

FRAUD. Global view on fraudulent motor insurance claims

MARKET OPPORTUNITIES

9

FRAUD / DRIVER BEHAVIOUR – RISK PROFILE

MARKET OPPORTUNITIES

1. Current Market 2. Emerging practices 3. Behaviour change

Milleage and simple

Event-Based UBI

- PAYD (Pay As You Drive)

- Discount driven

- Premiums based on

simple patterns (distance &

time of the day)

- Payment for Risk Profile

on a larger pool of drivers

- Privacy concerns for

customers

Emerging Practices

- UBI value only for

insurances

- Value linked to pricing

- Technology plugged

- Focus on cost

- Communication only Car

to back-end

Longer-term Goal

The game changer

- PHYD (Pay How You

Drive)

- UBI value for insurance &

consumers

- Premiums based on actual

driven risk

- Customers prioritize

saving to privacy

- Focus on profitability

- Technology on-board &

M2M communication

Vision of the Used Based Insurance (UBI) market

10

3. Servers receive data

and process it

4. Web basedsoftware offersdetailed insight

5. Provideconstructivefeedback as

needed

1. Sensors / Smartphone on board send data

2. Data sentover cellular

networks in real time

Signals

Servers Scoring

Sharing

Sensors

Basic Telematic System Architecture

11

Example – UBI:

12

• PAYD (Pay As You Drive)

• Vehicles safer to drive and protect passangers if

crash

• Advanced Driver Assistance Services (ADAS) in

high vehicles

• PRIVACY CONCERNS

• Premiums based on simple patterns (distance &

time of the day)

• Payment for Risk Profile on a larger pool of

drivers

• GROUP BEHAVIOUR

• UBI (Usage Based Insurance)

• PHYD (Pay How You Drive)

• Fraud and Leakage Claims detection

• Preventing crashes from happening (M2M)

• Driving behaviour is key factor in crashes

• Being first to be alerted by accidents

• SAVING PREFERENCES

• New risk algorithms, better calibrate

premiums with actual driver risk, how they

drive:

• Observing specific customer drive

(acceleration, braking, speeding, lane

changing)

• Pricing premiums based on the actual

risk posed by drivers

• Detecting fraudulent claims made by

customers

• Becoming the first to be alerted to

accidents

• PERSONALIZED RISK PROFILE

Ris

kfa

cto

rs

PAST FUTURE

Pro

file

Mo

del

Current Market & Future Challenges

Insurance companies Redefining

market

dynamics

Ten

den

cy

13

Impact of Vehicle Connectivity on Insurance Value Chain

- PAYD: Usage-based insurance

- PHYD: Driver-behavior-based insurance

- Vehicle health monitoring and maintenance

- Driver vitals monitoring / distractions alerts

- Safest-route guidance

- ADAS + V2V + V2I: pasive and active correction

- eCall / ACN reduces severity of injuries and saves lifes

- Virtual Black Box transmits vehicle crash data / video

- Driver vitals / health data transmitted to first responders

- Reduction of survey and investigation cost

- Fraud prevention and reduction (~80%)

- Stolen vehicle tracking / location

- In-network partners with pre-negotiatied rates

- Pay as you need

- Virtual violation detection and notification

- Automated payment

Usage & Behavior

Crash

prevention

Fast & Correct

Response

Claims & Cost

Containment

Connected law

Enforcement

10%-30% Premiums

20%-35% of

Crashes

5%-15%

Savings

30%-80%

Savings

20%30%

Savings

NOTES

ADAS. Advanced Driver Assistance Systems

PAYD. Pay As You Drive

PHYD. Pay How You Drive

Current Market & Future Challenges

14

Connected Car Savings

15

UBI & monitored driving

16

Do you now remember what:

PAYD

PHYD

UBI

mean ?

Thank you very much for your attention

– multumesc !!