insurance telematics study overview

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PTOLEMUS Consulting Group Insurance Telematics Study Presentation of the report May 2012 - Strictly confidential

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With 2 million customers worldwide, Usage-based Insurance has passed its tipping point, and is revolutionizing the insurance industry. The 405-page Insurance Telematics Study is set to become the reference document for the industry. It describes how the changes impact each part of the value chain and the strategic implications.

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Page 1: Insurance Telematics Study Overview

PTOLEMUS Consulting Group

Insurance Telematics Study

Presentation of the report

May 2012 - Strictly confidential

Page 2: Insurance Telematics Study Overview

PTOLEMUS

1PTOLEMUS in PAYD

Who we are

2

• The 1st international strategy consulting firm specialized in geo-connected mobility

• Strategy combined with real industry expertise and operational experience

• A focus on achieving results for our clients

• 100 years of aggregated experience in telematics, location-based services & mobility

• Close links with the mobility ecosystem

- Advisory Board Member of EENA(1)

- Member of ERTICO's(2) eSafety Forum and eCall HeERO Observers Group

- Close connections to national ITS organisations, ACEA(3), ASECAP(4), GSMA(5), etc.

- Speakers at most leading industry events & conferences

- Regular contributor to Telematics Update- Steering Committee Member of Mobile Monday (Brussels)

from Ptolemy, the Egyptian savant who built the 1st map of

the world in the 2rd century

(1) European Emergency Number Association (2) ITS Europe (3) Association of European Car Makers (4) European Association of Tolled Motorways Operators (5) GSM Association

Brussels Frederic Bruneteau, Managing Director

• Ms. HEC Paris, Ms. CEMS University of Cologne• Background: TomTom, SFR Vodafone, Arthur D. Little, BNP Paribas• Specialties: LBS, telematics (eCall, PAYD, etc.), mobile networks

Fulvio Sansone, Associate Partner

• Electronic Engineer (Univ. Naples), MBA CUOA Altavilla Vicentina• Background: Oracle, ERTICO, ESOA, Ansaldo Trasporti, Ericsson• Specialties: satellite, telematics, positioning

Paris Olivier Bourhis, Managing Partner

• MBA ESCP-EAP Paris• Background: Orga Systems, Cable & Wireless, TeleDanmark, PSA, Valeo• Specialties: Mobile networks and applications, train telematics

Eric Pite, Managing Partner

• M. Eng. Telecom ParisTech, MBA London Business School • Background: TomTom, Motorola, Sendo, Sagem• Specialties: Consumer electronics, LBS

Boston

Munich John Craig, Associate Partner

• M.Eng. Electrical & Electronic Engineering, Heriot-Watt, Edinburgh• Background: Intermap, Destinator, Cambridge Positioning, Ericsson• Specialties: Content & services, positioning, automotive

Milan Sergio Tusa, Associate Partner

• MBA ISIDA Palermo & Law degree, Palermo• Background: Magneti Marelli, Cobra, Nokia, Tele Atlas, Philips, NCR• Specialties: Telematics, automotive, mapping

Page 3: Insurance Telematics Study Overview

PTOLEMUS

1PTOLEMUS in PAYD

What we bring

3

Mobile content and social networking Application stores, crowd-sourcing, etc.

Navigation & location-based servicesMaps, traffic, fuel prices, speed cameras, weather, parking, etc.

Usage-based charging PAYD / PHYD insurance, Road User Charging,

PAYD car leasing & rental

Telematics & Intelligent Transport SystemsConnected car, tracking, fleet management, eCall, bCall,

Stolen Vehicle Recovery, Car As A Service, connected train, etc.

Positioning / Location enablement

M2M & connectivity

Our fields of expertise

Strategy definition

New market entry, business plan

development, board coaching and support

Evaluation of investmentsStrategic due

diligence, market assessment,

feasibility studies

Innovation management

Product & services development, project

management and launch

Business development

Partnership strategies, response to RFPs,

lobbying

Our consulting services

Our public reports

European Location

Study 2010

Insurance Telematics

Study Q1 2012

Emergency Services

Study Q1 2012

Global Location

Study 2012

Page 4: Insurance Telematics Study Overview

PTOLEMUS

1PTOLEMUS in PAYD

We have acquired substantial experience in helping all players in the geo-connected mobility ecosystem

4

Telecom operators

• Partners in Paris, Munich, Milan, Boston and Brussels

• +50 years of experience in mobile• +50 years of experience in telematics

Insurers & assistance providers

Montezemolo & Partners

Financiers

ITS operators

Telecom infrastructure providers

OEMs & telematics vendors

Consumer electronics makers

Content & application providers

Positioning solution providers

Page 5: Insurance Telematics Study Overview

PTOLEMUS

1

PAYD: Pay As You Drive insurance, i.e. based on number of actual number of kilometres driven

Example: some of our contacts within the PAYD insurance industry

5

PTOLEMUS in PAYD

INSURERS

PAYD SOLUTION

PROVIDERS

A contact network with all major industry players

Page 6: Insurance Telematics Study Overview

PTOLEMUS

1

6

For 2 private equity firms, performed the due diligence of Octo Telematics (Europe)

• These 2 private equity firms were looking to acquire Octo Telematics, the leading provider of PAYD solutions worldwide

• In 2 weeks, we conducted a pan-European review of the PAYD insurance and PAYD solutions markets

• We assessed the trends affecting the nascent PAYD market in Europe, thanks to a detailed investigation of commercial trials / launches and interviews with leading insurers

• Evaluated the validity of the company’s business plan and proposed revised assumptions for a number of key inputs

• We recommended the investment, based on the company's differentiated product and strategic lead

PTOLEMUS in PAYD

Page 7: Insurance Telematics Study Overview

PTOLEMUS

1

For Qualcomm, conducted a pan-European survey of the European PAYD / PHYD insurance market

• Qualcomm Enterprise Services is the world's largest provider of fleet management services

• Identified 15 target insurance groups in 6 countries

• Identified and contacted management level executives to perform interviews and assess PAYD progress and needs

• Defined lessons to be learned to improve Qualcomm's PAYD system offering

7

PTOLEMUS in PAYD

Page 8: Insurance Telematics Study Overview

PTOLEMUS

PTOLEMUS in PAYD 1

Assisted Magneti Marelli in developing its usage-based charging telematics business

• Managed different telematic businesses both in service provision and in hardware

• Supported the management in starting-up the business and setting-up the logistics platform to supply the insurance telematics business

• As a result, achieved the successful launch of an automotive grade black box

• Negotiated the contract with Octo Telematics, notably its technical, logistical and business terms

• Supported the adaptation process of the first supply to Octo Telematics

• Supported the initial business model for Autostrade

8

Page 9: Insurance Telematics Study Overview

Source: PTOLEMUS

Insurers are becoming more mature about PAYD

9

• 94 trials 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)

PAYD has passed the trial phasePAYD trials & launches in Europe

Telematics-based insurance 2

Italy

UK

France

Germany

Ireland

Belgium

Spain

Austria

Hungary

Finland

Netherlands

0 5 10 15 20

Page 10: Insurance Telematics Study Overview

Source: PTOLEMUS, based on Gartner's Hype Cycle

In our view, the time has come for insurance telematics

10

Telematics-based insurance 2

Insurance telematics has been through the peak & disillusionment phases

Technology trigger

Peak of expectations Disillusionment Enlightenment Maturity

Unipol & Aurora launch Octo's solution

Progressive launches

MyRate, first commercial PHYD offer

2004

Progressive pilots

TripSense UBI program in Minnesotta

2005 2007 2008 2009 2010 2011 2012 2013

NYC & Massachussets

investigate PAYD models

Renault launches

commercial insurance PAYD

programme

Norwich Union stops PAYD programme

Norwich Union launches PAYD

offer

2006

Groupama launches

Amaguiz PAYD system

Towergate & Aviva launch

PAYD commercial insurance

Qualcomm launches

PAYD / PHYD solutionNorwich Union

launches PAYD trial

Zurich launches Fleet

Intelligence PHYD offer

ÖSA launch telematics offer

in Germany

MAIF & MACIF launch unsuccessful

telematics offer

Launch of Coverbox by

Cobra Wunelli

Launch of Insure The Box

in the UK

Progressive renames MyRate

Snapshot Discount

The AA and Admiral launch PHYD offers

Toyota & Aioi launch PAYD on

Toyota's G-Book

Test-Achats gender ruling

Gender ruling becomes applicable

European Commission decides to

mandate eCall

Moody's recommends usage-based

insurance

2003

Unipol trial of Octo's solution

Page 11: Insurance Telematics Study Overview

PTOLEMUS

2

Source: PTOLEMUS

Connectivity is changing everything - Numerous players will be tempted to offer PAYD insurance

11LBA: Location-based Advertising; LBM: Location-based Marketing PAYD: Pay As You Drive insurance; PHYD: Pay How You Drive insurance

Telematics-based insurance

Handset  vendors

Car  OEMs

Insurers

Tolling  operators

Navigation  &  search  vendors

Oil  companies

Power  suppliers

Mobile  operators

Assistance  providers

Banks  &  leasing  firms

Maintenance  firms

TelemaCcs  service  providers

Car sharing

Multimodal navigation

Traffic & other

services

Road user chargingFinancing

Social networking

PAYD / PHYD bCall

LBA / LBMStolen vehicle

recoveryVoice &

messaging

eCall

Energy management

Car maintenance

Resource management

Connected car services

Page 12: Insurance Telematics Study Overview

3

Introduction

Our Insurance Telematics study is the most comprehensive report written on the subject

• 400 pages of analysis on the PAYD / PHYD market based on - 66 interviews in 14 countries- Over 120 figures (charts, tables...)- 2 years of research- Our experience & vision of the

ecosystem incl. OEMs and TSPs

• Case studies & learnings from ALD Automotive, Amaguiz, GM OnStar, Hollard Insurance, Insurethebox, Liberty Mutual, MAIF-MACIF, Norwich Union, Octo Telematics, Progressive, Solly Azar, State Farm, Unipol, Uniqa, Zurich

• A strategic analysis of the value chain evolution including - The impact of eCall- The impact of the smartphone- The impact of the Test-Achats /

gender ruling

• 10-year market forecasts - Country's readyness to telematics- Country forecasts for Italy, the UK,

France, Germany and Russia- Bottom-up estimates of the number of

policies for each insurer in EU countries, the USA and in South Africa

• Insurer's telematics market model results in Italy, the UK, France and Germany

• A handbook of suppliers' solutions including our own evaluation

• A complete set of recommendations to underwriters, TSPs, OEMs and governments

More than a research study, a real strategic

market analysis

Page 13: Insurance Telematics Study Overview

PTOLEMUS

Authors

This study has been written by strategists with decades of experience of telematics, automotive & mobility

13

Page 14: Insurance Telematics Study Overview

We have interviewed nearly 80 companies across the ecosystem

14

Organisation Country

Achmea Netherlands

Airmax Group UK

ALD Automotive France

Allianz France

Allianz Germany

Allianz Italy

Amadeus Capital Partners UK

Amaguiz (Groupama) France

Aplicom Finland

Arval France

Aviva UK

Axa Belgium

Axa Assistance France

Bird & Bird France

Cesar Satellite Russia

CNIL France

Organisation Country

Cobra Automotive France

Continental France

Covea France

Coverbox UK

Crédit Mutuel France

Cybit UK

Daimler Insurance Services Germany

ERTICO - ITS Europe Belgium

European Commission Belgium

Generali France

Generali Group Italy

Greenroad Technologies US / Israel

Hughes Telematics USA

ING Netherlands

Lysanda UK

MACIF France

Organisation Country

MAIF France

Masternaut France

Metaskil UK

Michelin France

Mobile Devices France

Navteq France

Norton Rose UK

Octo Telematics Italy

Qualcomm Enterprise Services Netherlands

SAP Switzerland

Scope Technologies Singapore

Sensomatix Israel

Skymeter Canada

Standard & Poors France

Stok Nederland Netherlands

Telit Italy

Organisation Country

Telogis USA

Texa Italy

The Co-operative Insurance UK

TomTom Business Solutions UK

Touring Belgium

Toyota Belgium

Trimble MRM UK

Uniqa Austria

Vivium / P&V Belgium

Vodafone UK

Wireless Car Sweden

Wunelli UK

Young Marmalade UK

Zurich Financial Services France

Zurich Fleet Services UK

Zurich Italy

Zurich UK

Primary research

Page 15: Insurance Telematics Study Overview

400 pages of facts, figures, examples, case studies, predictions and recommendations

15

Contents

Page 16: Insurance Telematics Study Overview

Extract pages of the report

16

Contents

Page 17: Insurance Telematics Study Overview

Extract pages of the report

17

Contents

Page 18: Insurance Telematics Study Overview

Over 220 charts, diagrammes, illustrations and tables

18

Customer lifetime cash flows for the insurer - UK

£

Average customer

Telematics customer

Increase in earned

premiums due to longer lifetime

Additional VAS

Additional investment

income (due to longer

lifetime)

Reduction in claims

costs

Telematics costs Other

expenses

300

600

900

£263

£645

The telematics customer NPV explained - UK

Contents

Page 19: Insurance Telematics Study Overview

PTOLEMUS 23

Conclusion

This strategic analysis can help insurers, OEMs, TSPs make Insurance Telematics a reality

• It addresses all sides of the subject, from the business model to the technology and privacy issues

• It looks at the issues from underwriters' perspective but also from the OEM's, the TSP's and the government sides

• This report provides you the way to - Leverage the learnings from 10 years

and over 90 experiments worldwide - Get the complete story: strategy,

marketing, business model, technical, legal, etc.

- Make decisions swiftly based on verified facts & figures

Bridging the gap between ideas and realities

Page 20: Insurance Telematics Study Overview

PTOLEMUS Consulting Group

S t r a t e g i e s f o r M o b i l e C o m p a n i e s

Brussels - Paris - Milan - Munich - [email protected] w w. p t o l e m u s . c o m