Since the first Pay As You Drive experiment by Progressive Insurance in 1998, almost everything has changed in telematics. It has transformed into a fast growing model that all insurers worldwide must revisit.
How important is the emergence of telematics for the global motor insurance sector however? In 2010, the European motor insurance market - the largest in the world - was worth an estimated €124 billion. Insurers paid out almost €100 billion in claims to car owners. By comparison, we estimate that its telematics-enabled services market at €5 billion, or 4% of the motor insurance market.
This highlights the contrast between a major but maturing sector of the economy and a burgeoning pocket of growth. This also clearly indicates that any take-up of telematics by insurers will have a major impact for telematics service providers and device makers. Does the reverse hold true?
In this study, we respond by analysing whether telematics will change the motor insurance market and how profoundly it will impact it.
We assess the present state of insurance telematics in the US and in Europe and the challenges ahead. We also identify and propose solutions to overcome them. Last not but not least, we analyse the continuing evolution of the industry value chain and attempt to detect the winners and losers.
This report will provide insights to insurers' management teams, notably CEOs, CMOs, CIOs, Business Unit Directors and Directors in charge of risk management and claims management. It will also interest assistance providers, automotive manufacturers, their tier-1 and tier-2 suppliers, telematics service providers (TSPs) and technology providers (TTPs), regulators and governments.
Our investigation also brings responses to the following questions: • Is telematics necessary for insurers and what are its driving factors? • What challenges remain and what actions must be taken by each party to face them? • How can customer acceptance for these services be increased? • How do the various telematic solutions available compare against each other? • Which are the best suppliers for each type of solution and commercial target? • How will the industry value chain evolve based on the actions of the principal agents? • What is the business case for the mass introduction of PAYD/PHYD insurance? • What is the expected market size for these products & services in the next 5 years? © PTOLEMUS - www.ptolemus.com - Insurance Telematics Study - Free Abstract - June 2012 - All rights reserved The present report is strictly reserved for the internal use of the company that downloaded it from www.ptolemus.com 6 © PTOLEMUS
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To conduct what is the most comprehensive study ever written on insurance telematics, we have relied on
• Interviews with over 80 executives from all sides of the industry, from Allianz to Zurich, • More than 2 years of desk research and primary research, notably a survey of available technology solutions,
• Building a simplified motor insurer's business model, with specific inputs for France, Germany, Italy and the UK,
• Building a 10-year forecast model of the US and European markets so as to combine strategic and technology analysis with hard figures, and obviously, • A review of applicable patents worldwide,
• Our existing experience in the field of insurance telematics. This report provides a “one-stop-shop” analysis of this complex business issue, across Europe and North America. The potential of other regions is also assessed. In our view, it is an important read for all insurers because • The motor insurance market is facing structural losses due to heavy price competition and rising claim costs,
• Telematics-based insurance offerings will provide to insurers who launch them a competitive advantage, notably a better pricing of risk,
• The ITS directive and fast decreasing technology costs are paving the way for a mass-market...
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