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Insurance Telematics USA 2014

03/09/2014 - 04/09/2014, Radisson Aqua Blu, Chicago

Pricing Becomes a Commodity: Insurers Enhance the Consumer UBI Proposition by Integrating Complimentary Services for Product Differentiation

Telematics: Using marketing partnerships to build brands

Susan Kuchinskas looks at how marketing partnerships can help companies connect with consumers

Brand awareness is tough to build, and most automotive telematics companies are unknown to consumers. But that’s starting to change.

In August, Hughes Telematics and AAA Club Partners announced an agreement to offer connected services, with Hughes providing hardware and its In-Drive aftermarket technology. AAA Club Partners is a holding company comprised of 10 American Automobile Association Clubs, and the partnership will open Hughes' tech to a potential market of nearly 12 million club members. The announcement follows a similar partnership between Hughes and State Farm, which provides a variety of services including emergency response, vehicle diagnostics and location services.

Weather Central, a global provider of weather data and forecasting applications, recently announced an agreement with Progressive insurance to provide the company's Live:Wire HailZone data and radar analytics for advance warning of severe hailstorms. Drivers sign up on the Progressive website and receive text messages on their mobile phones. The service also delivers National Weather Service watches and warnings.

Insurance companies have been leaders in introducing telematics to consumers, notably with usage-based auto insurance policies. (To see just how much this market is growing, see UBI Poised for Growth in the US.) There's a limit to how much direct-to-consumer marketing automotive tech providers can realistically accomplish, so partnering with insurance companies that already have strong consumer brands is a way to get what marketers call the ‘brand halo effect’.

"We're a B2B company, so we're looking for large-scale member organization that have some sort of affinity with the vehicle and can extend telematics and connected services as a way of extending their brands," Kevin Link, Hughes senior vice president of marketing, explains.

Sales force amplification

Branding is only part of the advantage of marketing partnerships. They also provide another sales force. "When you take brands like State farm and AAA, you have this vast agent network and brand identity,” says Eric Berkobin, vice president of after-market engineering at Hughes. “When you have additional brands and agents communicating the availability of these devices to customers, it will create an uptick to awareness in general." It's also a foot in the door to expanded opportunities.

The approach that has been taken is to partner with these large entities that also have another business need, according to Berkobin. With State Farm, it's usage-based insurance, which requires some form of telematics platform. A basic system that just does UBI would work, but this could also be an opportunity to do a truly connected vehicle.

For Weather Central, auto insurance is a new sector that's proving highly lucrative for new kinds of automotive services. "We're trying to analyze what do we have as a core competency and apply it to targeted industries where there is an unmet need,” says Steve Smedberg, senior vice president, enterprise. “The hail forecast jumped out as a real op to provide value to anybody affected by hail, and of course, insurance companies have the largest amount of skin in the game."

This is a sizable opportunity. Weather Central's enterprise group expects 2011 revenue growth of 50 to 60 percent above last year, primarily thanks to applications and services for insurance companies.

Penetrating the ecosystem

Doug Bremicker, vice president of business development for Weather Central, says the company is working with the entire automotive ecosystem: OEMs, tier 1 suppliers, hardware and software vendors around the world. The biggest opportunity he sees is creating new and unique services with existing weather data: "Automotive OEMs are looking for something other than just basic weather data. Our strategy is to focus on apps and content that are unique and interesting."

For example, the company could align weather data to road segments, to let a driver know that fog on a lowland route would increase driving time, making an alternate route a better choice.

QNX is another company that is partnering to expand its market. It recently announced that OnStar's FMV aftermarket rearview mirror uses its operating system platform.

"The majority of our interactions are directly with OEMS, and, in general aftermarket hasn't been a prime market we've tried to go after," says Andy Gryc, product marketing manager, automotive, for QNX. "FMV is great opportunity for QNX. We're proving that not only we can develop for OEMs, we can drive down costs and hit a consumer price point."
Brand equity

While aftermarket devices are relatively new and still unproven in the market, he thinks they may have strong appeal in emerging markets around the globe. For aftermarket devices like FMV, Gryc believes marketing partners are absolutely crucial. The partner firms don't create these systems, so someone creating them has to have enough brand equity to gain consumer acceptance.

Link believes that marketing partnerships will go through a few phases. "Right now," he says, "we are in single-plane, single-view relationships. Most are focused on UBI. State Farm is focused on extending services beyond cost savings, helping customers to drive more safely. With AAA, we're extending the experience of travel service."

The second wave will see more piggybacking of relationships, he thinks. For example, a single device might incorporate several partners involved in delivering services, so that a driver with State Farm insurance and AAA road service could access services from both on a single device.

Next, services and partnerships will expand even more. Providers of weather data, traffic data, coupons and insurance all will cooperate on a single device. In the final phase, Link says, "All that stuff gets integrated into the car. We will see all these things happening simultaneously and the end benefit is a more connected—and safely connected—customer with more options."

Susan Kuchinskas is a regular contributor to TU.

For more on UBI, see Telematics and UBI: The regulatory opportunities, Consumers and UBI: The power of value-added services, Telematics and UBI: How to increase consumer acceptance, and Insurance telematics in the US: Ready to grow?

For all the latest telematics trends, check out Insurance Telematics Europe 2012 on May 9-10 in London, Telematics Detroit 2012 on June 6-7, and Insurance Telematics USA 2012 in September in Chicago.

For exclusive telematics business analysis and insight, check out TU’s report Smart Vehicle Technology: The Future of Insurance Telematics.

Other TU reports include In-Vehicle Smartphone Integration Report and Human Machine Interface Technologies.

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Insurance Telematics USA 2014

03/09/2014 - 04/09/2014, Radisson Aqua Blu, Chicago

Pricing Becomes a Commodity: Insurers Enhance the Consumer UBI Proposition by Integrating Complimentary Services for Product Differentiation