One Quebec telematics services provider says usage-based insurance is at a tipping point in Canada, and insurers can make it profitable by mitigating those start-up costs through third-party partnerships.
“The premiums are low, and margins are already tight – so how do companies pay for this new technology?” asks Vincent Pavero, director of products and innovation with IMETRIK, a Montreal-based telematics provider. “Partnerships are one way. It could be through a deal with a dealership, paying for upfront telematics unit cost. The car sends out a reminder, ‘time for an oil change’ and recommends the dealership. That produces a cost savings for the insurer.”
Pavero says that currently there is a one per cent market penetration of UBI in Canada, and that 5 per cent is needed for it to be successful.
“Five per cent is needed for a tipping point for UBI to be considered a viable technology,” says Pavero.
The President and CEO for IMETRIK, Guy Chevrette, feels that 5 per cent point is close to happening.
“We are very close to realizing 5 per cent,” Chevrette told Insurance Business. “With the new partners we are talking to in the Ontario market, it will happen. The only showstopper will be the regulator.”
Although the regulatory criteria from province to province has proven daunting for telematics providers, change is moving fast, says Pavero.
“We have moved from one product (Mobiliz) to six, and there are more to come,” he says, citing Desjardins’ much-advertised Ajusto, and other products like en-route, intel auto, auto merit and SGI. “Will Canada have more than 10 UBI products in the market? Possibly. It would mean that Canada would have the highest density in the world.” (continued.)
#pb#
Pavero shared some numbers with those gathered at the recent Insurance Telematics Canada Conference in Toronto, numbers that indicate there is a rich market to mine for brokers who choose to promote telematics as an insurance option for their book of auto clients.
“We see that 94 per cent are open to buying UBI if there is no risk of premium increase – and these numbers are specific to Canada,” says Pavero. “Nearly 50 per cent are willing to change their driving habits, while 65 per cent are willing to pay for a value-added service.”
That willingness to pay for a ‘value-added service’ is what can also be used to ease the insurer’s burden of paying for a telematics deployment.
“It shows there is an advantage to UBI, and a willingness to support this new technology,” says Pavero.
And the differences between the Quebec and Ontario markets haven’t been lost on iMetrik, notes Chevrette.
“In Quebec, it was the reduction of premium that was paramount,” he says. “In Ontario, we’ve seen a difference – it is also reduction of premium, but a concern for a saving in energy costs as well. That is something that can be marketed.”
The potential for energy savings can be revealed in the telematics data that records hard braking, speeding and fast acceleration. Better, smoother driving has been shown to save on gasoline consumption, and on tire wear and tear.
Who has partnered with a third-party on a telematics product? Click
here to find out.
