Jamie Rodgers, vice president, Insurance Information Services, CGI, on integrating real-time driving behavior data with policy and claims records, and what new products and services can come out of it.
With usage-based insurance (UBI) now making its presence felt in Canada, the big question is how to put to work all the data it generates. Insurance Information Services (IIS) is working to answer that question.
A division of CGI, it has been collecting and managing risk data from private-sector insurance companies for the last 30 years. And it has been turning it into information products and services for risk assessment and pricing. Recently, IIS has begun working with partners to adapt the automotive side of the ISS information platform to handle real-time telematics data for the insurance industry.
Brendan McNally caught up with Rodgers to get an idea of some of the challenges involved.
Tell us what made CGI decide to extend its current platform to handle telematics data
Insurance Information Services exists to facilitate interactions between the producers and the consumers of insurance risk data. … What we're doing is extending the existing platform and adding some new capabilities to accommodate the receipt and delivery of data and services in real time.
This real-time data is going to be completely different from what you've been using before. How will it be integrated?
It is true [that] there are differences in telematics data and the data we’re most well-known for managing, particularly with respect to volume and velocity. But both feeds are fundamentally related to risk. Providing an integrated facility that our customers can use to merge driving behavior data with policy and claims [data] at an industry level will enable them to seek answers to a number of questions that have been posed and that have yet to be posed.
What is the relationship between driving behavior and claim frequency? What is the relationship between driving behavior and average claim payout? What is the relationship between driving behavior, type of vehicle, age of driver and claim frequency, claim payout, distribution channel and geography? The list goes on and on.
Also, with this central facility we are entering the realm of Big Data, where questions don’t have to be posed in advance. Analytics tools can identify trends, patterns and relationships in the data that otherwise might not have been discovered.
Why is it so important that the platform be agnostic?
There's a number of forces at play in the Canadian insurance industry that suggest the need for a well-defined central telematics hub that is independent of the mechanisms used to transmit standardized driving behavior data. Among them is the connected car which will transmit driver behavior data without the need for an OBD2 device. Another will be the use of smartphones once the auditability issues have been worked out. Another force is consumer rights, particularly data portability, as policyholders move from one UBI provider to the next.
These and other forces will demand a solution that is independent of device, telco and distribution channel.
Finally, choice is a force in play. Right now, there's a number of small- to medium-sized insurance companies that are finding it hard to make the business case for UBI. They're faced with an additional $10 to $12 per month of costs per policy for devices in the field plus all the other infrastructure requirements – on an auto product that already has very low margins and on which they can only offer a discount. We see the platform and the resulting network effect lowering the price of entry into the UBI game, allowing more consumers to have a greater array of products and services from which they can choose.
What is the time frame for all this?
We've been contemplating and architecting this platform for some time now, and our plan would be to have the various components and partners confirmed by the end of May and [to] be able to execute platform services shortly thereafter.
What's the chance that this platform might be adopted by the U.S. UBI market as well?
If you look at the U.S., there's a couple of big players offering similar services as Insurance Information Services does in Canada. ISO and LexisNexis are two such organizations. Right now, if I were them, I'd certainly be thinking of making investments in leveraging their existing platforms to accommodate real-time data.
Brendan McNally is a regular contributor to TU.
For all the latest telematics trends, check out Content and Apps for Automotive Europe 2014 on April 8-9 in Munich, Germany, Insurance Telematics Europe 2014 on May 6-7 in London, Telematics India and South Asia 2014 on May 28-29 in Bangalore, India, Insurance Telematics Canada 2014 on May 28-29 in Toronto, Telematics Detroit 2014 on June 4-5 in Novi, Michigan, Advanced Automotive Safety USA 2014 on July 8-9 in Novi, Michigan, Insurance Telematics USA 2014 on Sept. 3-4 in Chicago, and Telematics Munich 2014 on Nov. 10-11 in Munich, Germany.
For exclusive telematics business analysis and insight, check out TU’s reports: Insurance Telematics Report 2014, Connected Fleet Report 2014, The Automotive HMI Report 2013 and Telematics Connectivity Strategies Report 2013.
May 2014, Westin Prince Hotel, Toronto
Laying the Foundations for Insurance Telematics: Utilise UBI Data & Get Up to Speed with Regulations to Entice Consumers