Tackling Telematics—Transcript

Episode 3 - Broker on the Go

John McClelland, founder at miBroker.

Some in the industry think that telematics hasn’t taken off as some predicted. I’d say that in general, that’s true.

There was an awful lot of hype about telematics back in late 2013, early 2014. The IBAO was involved in trying to bring a couple of UBI products to market, and one of them was going to be targeted to young drivers under 25 specifically. Unfortunately, none of those products ever really came to fruition.

There were a lot of other carriers who were going to have a telematics product—UBI—that they were introducing, and a lot of them backed off of those as well.

One large insurer that did move forward with it is Intact. So Intact has their My Driving Discount program that they’ve been running, and they’ve actually seen—certainly not a lot of people rushing to it when it was first made available in 2014—but they’ve seen some consistent gains with it.

Recently, they’ve seen a huge uptick in new business sales with this product. So they’re actually seeing that 50–60% of their new business for personal lines auto—I believe that’s across Canada—is taking the UBI product.

Probably half the business they’ve got coming in is through Canadian BrokerLink brokers. So they’ve got the brokerages they own pushing that product, so that’s skewing the numbers a little bit.

What can insurers and brokers do to get customers more interested in UBI? I think there’s an issue, maybe, of education. I think certainly with Intact having some of the brokerages that they’re involved with—Canadian BrokerLink—they’re definitely making sure that they push this product. Intact has had some very good results with it.

I think as brokers become more aware of and comfortable with this product, they’ll have an easier time selling it to customers.

Something I’ve been pushing for that we can hopefully see soon is I think it’d be a really good thing for insurers to have test accounts—especially now that some of these things are moving off of devices that plug into the car and onto apps that download onto smartphones. That way a broker can download a test account. Even though I may not be an Intact customer, show me exactly what it’s like driving with this thing running in the car. That would just allow you to speak to customers better about battery usage concerns or just general usability of the app.

A lot of the people I’ve talked to who have used it—it’s almost gamifying the driving a bit. They want to see what their max discount is going to be and compare it to their friends’. So I think educating brokers a bit more on some of that fun that can be had around it so they can better speak to it when they’re talking to their customers.

I think insurers in Canada do want to see telematics succeed. I think some insurers, what they want to see in order to invest in bringing a product like this to market is see regulators loosen up the restriction a bit on it being a discount only. Not that there needs to be a surcharge, but I think they’d like to see some of this data being able to be brought into the base rate.

That gets at some of the things we’ve seen in other jurisdictions, like in Europe and the United States.

Metromile is a great example. It’s based in the States–they’re in a handful of States now. I think they started in California. It’s pay-per-mile insurance. So the base rate is calculated so that they can determine a rate per mile that the person is driving. I think it’s really great for consumers in this day and age. A lot of people are driving less often because of things like ride-sharing. Especially in cities, transit is a great option if you’re downtown. But they may still need a car for the weekend or to do other errands.

Another stat I heard that was very interesting was from a telematics provider. They’ve seen insurers that are using their product be able to improve their results by up to 12%. So I think when you’re getting that much data coming in and you’re able to underwrite things better, there is a big incentive for insurers to be able to improve their results.

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