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3 Predictions for Telematics in 2014

Towers Watson's Robin Harbage expects insurers to double down on raising awareness of telematics products.

I caught up with Towers Watson global leader for usage-based insurance Robin Harbage today upon the release of the company's new scoring model for UBI programs. DriveAbility 2.0 Score, Harbage says, is more in line with the company's original view of the product: it is based on historical data collected over the course of three years with from actual insurance telematics users.

"Our previous score was based on public studies that had been done by driver behavior from multiple sources," Harbage explains. "Our second generation score is based specifically on the driving behavior -- we now have sufficient data that's been pooled over the past three years, calibrated to actual insurance losses."

The company had put out the original version when it became apparent that insurers wanted something so they could get started in the market, which has been heavily anticipated to grow over the past few years. I asked Harbage what his view was of telematics: Is the hype meeting demand?

[N.Y. welcomes usage-based insurance]

"Progressive has said it's disappointed it isn't higher -- but they would like it to be 100%," he says. "No insurers have pulled back, which says something about their confidence in the market, though. We've seen information indicating that takeup rate is up to 40% for people who are shopping for insurance and are offered a UBI program."

With that in mind, Harbage expects three key strategies in the UBI market this year.

"I would expect insurers to continue to refine their marketing messages to encourage signups," he says. "They'll also expand their service offerings to add more types of value added services, and experiment more with new technologies.

[Can insurance discounts lead to fewer distracted drivers?]

"None of the mass-market programs in the U.S. market use smartphones today to collect the data," he adds. "We think there will be more and more use of smartphones, in some cases integrated with the OBD2 device, that can lower the cost of these programs."

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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Nathan Golia
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Nathan Golia,
User Rank: Author
2/4/2014 | 5:35:59 PM
re: 3 Predictions for Telematics in 2014
This is smart Gă÷ it's likely that the same people who are buying online are also more likely to be interested in integrating technology with their cars. Insurers definitely are on the record noting which of their customer segments are receptive to telematics and which aren't.
Nathan Golia
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Nathan Golia,
User Rank: Author
2/4/2014 | 5:34:36 PM
re: 3 Predictions for Telematics in 2014
There is a company combining telematics and gamification so you can opt to use your data to establish that you're the "best driver in Tennessee" or something similar to that. That should go some distance toward making people more comfortable with the concept.
Kelly22
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Kelly22,
User Rank: Author
2/3/2014 | 6:04:54 PM
re: 3 Predictions for Telematics in 2014
Sounds like UBI is slowly but surely gaining popularity among insurers and consumers. The challenge now is spreading the word, as most people who learn about UBI are intrigued by it. It'll be interesting to see how UBI plays into insurers' marketing strategies this year.
Kelly22
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Kelly22,
User Rank: Author
2/3/2014 | 6:00:05 PM
re: 3 Predictions for Telematics in 2014
I'd be interested in seeing the results of a study like that. It would definitely get people talking about UBI!
Becca L
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Becca L,
User Rank: Author
1/31/2014 | 8:23:00 PM
re: 3 Predictions for Telematics in 2014
How many marketing dollars have been put into UBI based programs? People tend to be really intrigued by the idea but few have heard about how they can get involved.

Marketing idea, in case anyone is asking: People are always saying such and such state has the worst/craziest/slowest drivers. I'd like to see UBI used in a state contest. Rank which states are best at using blinkers, and more likely to hard break at traffic lights, etc. Participants earn some type of reward/trophy.
Becca L
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Becca L,
User Rank: Author
1/31/2014 | 8:18:22 PM
re: 3 Predictions for Telematics in 2014
Living in the city I dont have a car but I find telematics fascinating. I ask a lot of my car-owning friends if they have any thoughts on telematic based insurance and to date not one of them has heard of it. To be expected, I suppose, not many people out of the industry pay attention to the market. But when I tell them the overview and potential benefits all get pretty excited about the concept.
KBurger
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KBurger,
User Rank: Author
1/30/2014 | 7:12:23 PM
re: 3 Predictions for Telematics in 2014
That sounds like a pretty savvy approach. In addition to the telematics angle, it also points to how distribution in general is changing in insurance, especially as direct & online sales continue to gain momentum.
LRoncevic
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LRoncevic,
User Rank: Apprentice
1/30/2014 | 6:54:04 PM
re: 3 Predictions for Telematics in 2014
Speaking to the point of marketing messages to encourage signups, I've observed firms, such as Nationwide, Progressive and State Farm, start to incorporate telematics enrollment directly into their auto quote tools. Prospects are now able to easily opt-in to the program while purchasing an auto policy online. Integrating the two functions streamlines the process, builds awareness and possibly reduces the amount of subsequent enrollment requests to agents and customer service representatives.
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