September 05, 2012

The dashboards of cars rolling off assembly lines today recall the "futuristic" cars seen in action movies. Built-in or aftermarket technologies including GPS, entertainment and mechanical reports are common. Powering these are connections directly from the car to the nation's cellular infrastructure. And, with the market for mobile phones becoming saturated, wireless carriers are looking for new sources of revenue at the same time that auto insurance companies are exploring usage-based insurance, which requires a way to get driving data from a car to the insurer.

This has provided a natural place for partnership between the two industries, which Overland Park, Kansas-based Sprint capitalized on with the release of its Integrated Insurance Solutions usage-based insurance platform in July.

"Our goal is to become the wireless provider for the connected vehicle," says George Kandt, business development manager for the emerging solutions group at Sprint. "Whether it's usage-based insurance or fleet management or intelligent dispatch and routing, we want to be the leader in the space and we think there's a lot of potential there to make a difference."

Sprint partnered with Esurance (San Francisco, Calif.) on a pilot version for usage-based insurance that included development of a device for the OBD2 port in a car. But for the wider release of the program, Sprint discovered it had to offer more than just technology platforms. Analytic expertise -- that is, the ability to interpret the driving data to get to the right pricing -- is important for many of Sprint's target insurance carrier customers.

"We're trying to help the mid-tier insurers -- they might only have one product manager or one actuary," says Bill Faresich, product manager for Integrated Insurance Solutions at Sprint. "What we offer to an actuary is the [data mining] software that we're using in the first release: Agnik (Columbia, Md.) Minedrive. That has an open interface, so they can take it how Agnik provides it, or they can use their own actuarial tables and convert it into a score."

Sprint also offers integration with other analytics software so that insurers can score data within its usage-based insurance platform, including Towers Watson's DriveAbility (which Esurance used in the pilot). Faresich says that Sprint's scale allowed it to refine its offering over the course of the three-year pilot with Esurance and try several different approaches. And, because the company was already involved with insurers on the IT side, it was easy for it to learn pain points for other business units and find a way to solve them, he adds.

"We talk to insurance companies every day about devices for their field agents, phones they can use, wireless laptops for their claims agents, for example," he explains. "With laptops and phones we're talking to IT folks, and with UBI it's typically the actuaries or the marketing folks. But we're already in that organization selling services."

Faresich also predicts that next up for insurers is offering more data-centric capabilities that don't directly relate to customers' premiums as part of their connected car services. These could include vehicular health monitoring, information on driving behavior and location-based information.

"Some of these solutions that are going to offer value-add services, like green driving or maintenance alerts," he says. "There's benefits for the ins carrier, who can improve loyalty by offering these devices in the car."

ABOUT THE AUTHOR
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, ...