James Bielak, program manager, property & casualty, ACORD, on developing a workable data standard for usage-based insurance (UBI).
With insurance companies scrambling to add UBI to their product portfolios, a number of interesting methods for capturing and transferring data have emerged – to the confusion of all involved.
James Bielak, program manager, property & casualty, ACORD, speaks to TU’s Jan Stojaspal about efforts to impose an industry-wide data standard to help keep costs down for everybody and to encourage data portability.
Can you tell me a little bit about what the current state of discussion is for data standards in insurance telematics? Are there standards? Are there calls for standards?
First of all, you need to understand that insurance telematics is just a narrow slice of automotive telematics in general. And, as ACORD is basically working for our insurance company members, we’re interested in ensuring that our members – insurance carriers – get telematics data in a consistent fashion from all the data vendors that are out there.
You have device manufacturers, you have telematics service providers, you have a number of different data sources. For an insurance carrier that’s dealing with multiple data sources, it really helps – it keeps costs down, it lowers complexity – if you could get all of that data in a consistent feed. And that is the data standard that we’re working on right now.
Has anything been finalized? What stage are we in?
Effectively, we tackle the problem from the outside in. First of all, we’ve got different vehicles, so we identify what vehicles are involved. Each of the vehicles has different devices, and so we identify within our messages the devices associated with the vehicle.
Carriers are interested in events – things like braking events, cornering events – and we can identify those. And we also cover the basic time-series data that goes along with those events, so you’ve got moment-by-moment tracking: where was the vehicle, how fast was it going, what was the mileage, latitude and longitude – things like that.
Version 1.0 of the ‘Vehicle Telematics Notify’ transaction was published in January and is available on ACORD’s standards download site.Version 2 of this message is expected in July, [and] it will include telematics scores and data frequency distributions.
And there’s broad agreement on the need to standardize?
Yes, there is, and the neat thing is that the presentations that I saw today [day one of Insurance Telematics USA 2013], people that talked about data, they basically validated our model … that we’re on the right track, that this is what people need in order to do the sorts of analytics that need to be done with telematics.
Yet there appears to be resistance. What’s the nature of that?
One of the biggest areas of resistance that I’ve encountered in the past is with a data provider that, for example, thinks, Well, why do I need a standard? I already have a couple of insurance carriers that I deal with, and they’re using my proprietary interface. Why do I need to adopt a standard? If I do, then it will be just as easy for my customer to jump ship and go to someone else who uses the standard.
The point we’re trying to make is that the use of a standard helps to keep costs down for everybody, and, besides, you’re not going to hold onto a customer because you have a proprietary interface. It’s quality of service and the type of data you provide that’s going to keep your customers.
But the resistance is mainly because, I think, people are really unaware of the value, and what the standard is all about. Some folks think that ACORD’s telematics data standard is involved with the telecommunications infrastructure, how the device transmits data, the form that the data arrives to the TSP. We’re not involved in that. We’re only involved with the last hop – from the data aggregator/the data provider to the insurance company.
It’s my understanding that you’ve had a similar situation with life and annuity. Can you talk a little bit about that? It seems there’s a parallel.
Yes. In 2002 or 2003, ACORD approached a number of vendors that provide lab tests, medical records, things like that, to life insurance companies, to help them evaluate their underwriting. And there were hundreds and hundreds of different formats out there. The data providers were under the gun to provide like 900 different insurance companies, each with their own interface. ACORD said, ‘Let’s standardize that.’ And there was a lot of resistance.
But within four or five years, it was amazing how level the playing field had become. Costs were being saved all the way around. Now it becomes a discussion of whether or not one is following the standard and you need to do it this way and not the way you’re doing it. So the standard has really gained traction, and everybody is using it now.
And I guess the cost consideration is only a small part of it. Data portability is the big one.
If the consumer wants to take their data, their good driving behavior and say, ‘I want to try out that data on another company, can you send it to them?’ we have to have a standard in order to move that data around.
What does it mean to say, 'Here’s the time-series data for all the trips that you took last year.' What does it look like? Our standard addresses that and gives you a consistent way to deliver that information.
Is the standard you are working on industry-wide, or does it just involve ACORD members?
We realize telematics is a wide-open field. A lot of vendors are appearing. Our telematics working group is wide-open to anyone that wants to join in. Our website is open. Everybody can download the specification we’ve created. So we’re wide-open, and we want to have the input because we want to get this right the first time.
And what is the next step for you? Are there going to be other types of variables you’ll be looking to standardize?
We have a lot of work left to do. We actually have probably only half of the basic data forms covered in our first release.
Right now, we’re doing time-series data, vehicle moment-by-moment data and how it’s behaving. Some carriers have mentioned that they want to develop histograms and do frequency distributions. Well, how do you represent that in XML? We’re going to be addressing that soon. How do you communicate scores? We haven’t touched upon that in any detail, but we have to come up with a format to deliver scores. There are a lot of different variables involved in commercial lines and fleet management. We’re not done.
Jan Stojaspal is the executive editor of Telematics Update.
For all the latest telematics trends, check out Telematics for Fleet Management Europe 2014 on March 12-13 in Amsterdam, The Netherlands, 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, and Advanced Automotive Safety USA 2014 on July 8-9 in Novi, Michigan.
For exclusive telematics business analysis and insight, check out TU’s reports: Telematics Connectivity Strategies Report 2013, The Automotive HMI Report 2013, Insurance Telematics Report 2013 and Fleet & Asset Management Report 2012.