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Strategies for Improving the Customer Experience Paul-André Savoie, CEO, Baseline Telematics

Strategies for Improving the Insurance Customer Experience

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Strategies for Improving the

Customer Experience Paul-André Savoie, CEO, Baseline Telematics

Insurance Telematics

Presentation to the

SAP Financial Services Forum

Sept. 18th, 2013

Paul-André Savoie

Confidential Baseline Telematics 2013 © 2

Agenda

• A brief history

• What is Usage Based Insurance

• The Real benefits

• How it works

• Co-Innovation: Government of Saskatchewan

• The story about Canada’s first UBI launch

• A live demonstration of the solution/platform developed for Mobiliz

3 Confidential Baseline Telematics 2013 ©

• In 1995, founded and launched Boomerang Stolen Vehicle Tracking Systems, installed over 300K devices, IPO’d and sold to LoJack in 2004 for 64M$ CAD.

• In 2001, founded and launched Datacom fleet management solutions, installing over 30,000 devices in Canada, raising over 15M$ in venture capital, IPO in 2006.

• In 2007, focused Operasoft to provide an industry specific Fleet & ERP Solutions for municipalities across North America.

• In 2009, focused Baseline telematics to design, build, deploy & operate Canada’s first UBI program with Industrial Alliance.

A brief history…

Confidential Baseline Telematics 2013 © 5

What is Usage Based Insurance

• It’s an innovation allowing insurance companies to price auto policies based on non traditional variables, which up until recently were not available; actual vehicle usage.

• There are 3 types of UBI programs;

• PAYD – Pay As You Drive (Mileage based)

• PHYD – Pay How You Drive (Behavior based)

• MHYD – Manage How You Drive (Both, with active feedback)

• There are two methods to financially implement UBI programs;

• Usage Based Discounting (Rebate applied to next years premium)

• Usage Based Pricing (Varies Monthly)

Confidential Baseline Telematics 2013 ©

Traditional Variables: Age, Gender, Previous Claims, Driving Record, Credit Score…

Gaining public attention…

Confidential Baseline Telematics 2013 © 7

The real Benefits

• To the insurer

• Ability to price insurance in a fairer & individualized method

• Overall reduction of claims frequency, severity & costs

• To the policyholder

• More control on the premium’s cost (behaviour & usage = price)

• Active feedback on driving habits thus improving safety

• Lower fuel consumption

• Other value added services

• To Society

• Safer drivers on the road

• Reducing the catastrophic loss of human life & debilitating injuries

• Free up emergency rooms from avoidable trauma injuries

Confidential Baseline Telematics 2013 ©

Confidential Baseline Telematics 2013 © 8

How it works

• Technology now allows insurers to determine rates that reflect a driver’s actual driving behavior, directly correlating to the likelihood of being involved in an at fault collision.

• A Telematics Device (GPS transponder) is installed on the vehicle, reading, calculating, and transmitting usage information such as;

• Location

• Time of day

• Speed

• Heading

• Trip Start & End

• Engine on & off

• Mileage

• Towing/Theft (shock sensor)

• Battery Voltage

• Aggressive Cornering

• Hard Braking & Acceleration

• Collision (Impact sensor)

• This information is captured and analyzed to develop more accurate individualized pricing.

Confidential Baseline Telematics 2013 ©

UBI, a global phenomenon

0 10 20 30

USA

UK

ITALY

FRANCE

SOUTH AFRICA

GERMANY

IRELAND

BELGIUM

SPAIN

OTHER

94 trails worldwide (67 in Europe) 54 commercial launches (40 in Europe)

Success stories in multiple countries, notably Italy (Unipol), Spain (Mapfre), France (Groupama), the UK (Coverbox),

Austria (Uniqa) and the US (Progressive) Overall, we estimate PAYD-equipped vehicles at over 2

million (worldwide)

Source: Ptolemus Study

PAYD HAS PASSED THE TRIAL PHASE PAYD TRIALS & LAUNCHES GLOBALLY

UBI Is happening around the world

9 Confidential Baseline Telematics 2013 ©

Experts predict over 100M UBI policies in the US by 2020 (3M now)

Impact of telematics on road safety

Transportation research board (TRB) in 2007 Washington meeting: “exposure to the feedback generated over 40% reduction in crash rates”2

In 2007, a major insurance carrier’s fleet survey showed a 20% to 30% decrease in accidents3

European Union Samovar drive II project showed a 28.1% crash reduction in 19954

1: royal society for the prevention of accident UK (http://www.rospa.com/roadsafety/info/black-box-technology.pdf 2:http://www.oryarok.org.il/webfiles/audio_files/072173_Musicant_Lotan_Toledo.pdf 3 and 4: Insurance services office - Verisk Insurance Solutions group at Verisk Analytics.- review – August 2009

Many studies worldwide have shown reduction between 20% and 40% in crashes. Most effective programs are clearly those that provide driver feedback1.

10 Confidential Baseline Telematics 2013 ©

Co-Innovation: Government of Saskatchewan

Between 2007 and 2011: $99M in at-fault incurred claims

According to NHTSA1, per mile, motorcyclists are 35 times more likely than passenger car occupants to die in a traffic crash. 1-http://www-nrd.nhtsa.dot.gov/Pubs/810990.PDF

11 Confidential Baseline Telematics 2013 ©

1618 crashes

668 injuries

29 deaths

• 53% of motorcycle accidents involved no other vehicles1

• About half of motorcycling deaths and a third of injuries occur on corners2

• 90% of these occur when the motorcycle crosses into an oncoming lane, or runs off the road2

• Most cornering crashes occur on dry, sealed roads, on weekends in daylight2

12 Confidential Baseline Telematics 2013 ©

Discovering what safety looks like with SAP

Leveraging F1 Racing experience

• Undertaking a world leading research program for specific motorcycles risk factors

• In association with SAP we are adapting existing telematics technologies for on road motorcycles safety (cornering)

13 Confidential Baseline Telematics 2013 ©

Z – Up/Down

Y – Left / Right

X – Front / Back

Confidential Baseline Telematics 2013 © 14

‘G’ forces are different on a motorcycle

Y – Left / Right

X – Front / Back

Confidential Baseline Telematics 2013 ©

Z – Up/Down

Y – Left / Right

– Front / Back

Z – Up/Down

X – Front / Back

Leveraging F1 Racing experience

• A pilot project was conducted on 200 Industrial Alliance clients in November 2010.

• The joint development project was inaugurated on May 11th, 2011 – Started from a blank page.

• 5 months of brainstorming & needs analysis

• 6 months of intensive programming/testing/debugging

• 11 months later, to the day, the program is launched in Canada (Province of Quebec only) April 11th, 2012

• The Result: Industrial Alliance launches the first PAYD insurance product in Canada, the most innovative in the world.

Canada’s first UBI launch

15 Confidential Baseline Telematics 2013 ©

Primary objective to “Save Lives” by focusing on driving behavior of 18 to 24 year olds who were experiencing a significant number of

accidents and loss of life

16 Confidential Baseline Telematics 2013 ©

ABOUT IAAH UBI GOALS UBI CONFIGURATION UBI OUTCOMES

• Social Cause • Breakeven Financial

Goal – Mutual Company Treatment

• Company Financial Key Indicators Improvement

• Total Focus on the Customer

• Youthful Drivers Focus • Web 2.0 Design • New Brand, Mobiliz • Dynamic Customer

Portal • Quotes in Seconds;

Issues in 2 Minutes • Weekly Driver and

Premium Statistics BI

• Home Office is Quebec City, Quebec

• General Insurance Company Since 2000

• Distributes Auto and Home Insurance to Individuals

• $195.1M 2012 DWP • $5M UBI Investment

• Driver Behavior Changes

• Paperless Straight-Through-Processes

• Loss Ratio Improvement/Greater Profitability

• Operating Cost Reductions

17 Confidential Baseline Telematics 2013 ©

Confidential Baseline Telematics 2013 ©

Live Demonstration

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Confidential Baseline Telematics 2013 ©

Telematics based insurance:

Empowering the Consumer

Paul-André Savoie, C.Dir, ASC

President & CEO 324 Chemin du Tour Laval (Québec) H7Y 1S5 Canada Phone: +1-514-907-3448 [email protected]

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