Usage-based insurance marks beginning of M2M changes

For many Canadians, signing up for insurance that monitors the way they drive is the first direct interaction they will have with machine-to-machine communications (M2M). Attendees at a one-day M2M Canada 2014 conference in Toronto in March compared M2M technology to science fiction and predicted it would lead a “revolution” in interconnectivity comparable in scale with the industrialization of Europe and North America in the 19th century, the Wire Report reported earlier this year. With usage-based insurance (UBI), for some drivers in Canada, the revolution is already here. Desjardins Insurance was the second company to offer UBI and the first to offer it to drivers of all ages, launching in May 2013 in Ontario and Quebec. Spokesman Joe Daly said between 20 and 30 per cent of its new customers sign up for the program. Under UBI, technology monitors driving habits and usage to offer discounts to drivers, relying on a small device plugged into the vehicle’s diagnostic port to interpret driving data, known as telematics, and send it back to the insurance companies. Under the Desjardins UBI program, new customers can sign up to have a small device installed in their car’s on-board diagnostics port that will detect hard braking and hard acceleration as well as monitoring the car’s mileage and the time of day the car is used. “From a business standpoint, we're trying to attract good, safe drivers who tend not to drive that much, don't drive aggressively, don't drive late at night, and thus are much less likely to get into an accident,” Daly said. Industrial Alliance began offering a UBI program for young drivers in Quebec in 2012. Anyone who signs up for the program gets an immediate five per cent discount off their yearly premiums, and once the data has been analyzed, can earn a discount of up to 25 per cent, Daly said, adding that the average discount for UBI customers is around 12 per cent. No customers, he noted, will have higher premiums under the program, as provincial rules prohibit the use of such data for raising rates. “Customers, they sort of self-select,” Daly said. “Those customers who won't get a discount won't sign up.” At the end of March, Daly noted, the company had around 50,000 customers subscribed to the UBI programs in Ontario and Quebec. Canada lags the United States, where more than half of all American insurers use some type of UBI, according to Daly. Provincial governments must approve any company that wants to offer UBI. CAA South Central Ontario, an affiliate of the Canadian Automobile Association, has received approval and struck a deal with the U.K.-based Quindell Portfolio PLC. to bring UBI to its 1.9 million members, the company said in a September press release. Although right now Dejardins only uses the four metrics of acceleration, braking, time of day, and mileage, in the future “all sorts of data on driving patterns” could provide “other value-added services,” Daly said. Thilo Koslowski, a California-based automotive technology analyst at Gartner Inc., told the Wire Report in February that opportunities for telecoms in the connected-cars field are “huge,” given that the car is “the ultimate mobile device.” "Machine to machine is the key functionality behind it that helps enable ," Nauby Jacob, who heads M2M operations at Bell Mobility, owned by BCE Inc., said in a phone interview in March. "They're able to take driving habits and data mine to look at different methods of serving the customer." The Wire Report reported in March that companies such as Rogers Communications Inc., BCE and Telus Corp. are all looking to become one-stop-shops for M2M solutions, integrating their wireless networks with their own and outside technology to provide customers with one source for the design, implementation and service of M2M networks. The UBI services offered by Desjardins UBI devices, manufactured by Montreal-based iMetrik Solutions Inc., are part of that system, sending data automatically over the Bell network, Daly said. “I think the potential for telematics is just incredible within the industry,” said Intact Insurance spokesman Gilles Gratton. Intact Insurance and Belairdirect, both owned by the Intact Financial group, offer usage-based insurance programs broadly similar to that of Desjardins to customers, rolling it out first in Quebec and then Ontario. “It's a model that allows us to attract the best drivers,” Gratton said. “The program is there only to offer rebates. We're not going to use the information to deny the renewal of insurance or to increase rates. The program is basically aimed at offering a reduction in rates to drivers with good driving habits.” Consumers have access to the data as well so they can monitor their own driving, he added. Gratton did not give out early subscriber numbers, only saying that the response in Quebec was “much higher” than expected. “As the technology begins to be more known, as the benefits of the programs are going to be more known, we will see some increase in the number of consumers who participate in such programs,” he said. — With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Usage-based insurance marks beginning of M2M changes

News | April 28, 2014

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Usage-based insurance marks beginning of M2M changes

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