Tom and Mike here. We just got back from the Auto Insurance Report conference and one of the biggest topics that we’ve heard is the idea of usage-based insurance and telematics.
So Tom, first off, I want to ask you why telematics is so important or usage based insurance. And then secondly, the top three things that a carrier who hasn’t taken any step into the telematics space can start to do as they want to explore this opportunity.
Thanks Mike. The first is timely, because the largest and probably most advanced telematics provider in the country just came out with their fourth quarter earnings presentation and basically gave a playbook on what they’re seeing from telematics. Punch line is telematics is the most predictive rating attribute in the auto insurance class plan. If they’re seeing it and saying it, it should be a recognized highly attribute in the auto class plan because of how predictive it is.
We think about the three most critical ways that a carrier that’s not using telematics, they can get into the marketplace.
One, there’s a range of outcomes. There isn’t a one simple solution and it’s encouraging because there’s so many options that a carrier can select from. From mileage to behavior and what they want to bring into the class plan and how they want to do it.
Second, the data will continue to increase, and with data increasing, that means the cost of data will continue to come down. So be more accessible, more amenable for a number of carriers.
Third, more and more vehicles on the road will be connected. The higher level of data connectivity will increase the availability of that data, making more and more vehicles outfitted with that technology and the data access for all carriers to access that data.
So the outlook is certainly encouraging. The game is not won. We’re still very early in the adoption and evolution of telematics. If you’re a carrier out there that hasn’t invested yet, I think the time is now. I think to really put together a plan and a road map for where you want to go with your product over time. And there’s a lot of options to do that. Yeah it’s certainly an exciting time for the telematics space.