Telematics: Who’s jumping into the pool and who’s watching from the deck

Auto insurers are taking a variety of approaches to telematics: Some are observing from the sidelines, while others report growing interest from consumers.

The Travelers Companies Inc. introduced IntelliDrive in Canada last week, as Michael Klein, president of personal insurance for New York City-based Travelers, mentioned during an earnings call Jan. 21.

IntelliDrive is a mobile app that Travelers Canada’s Ontario auto clients can download on to iPhone or Android devices. The app measures driving behaviour such as sudden acceleration, hard braking, and texting while driving.

Telematics is when auto insurers take driving behaviour into account to set pricing. They monitor insured vehicles using devices plugged into the diagnostic ports or by offering mobile apps to the motorists.

When CAA Insurance introduced its MyPace telematics product in 2018, there was a waiting list.

“Never in my career have I heard of a waiting list to buy insurance. We are not selling iPhones, where everyone lines up around the corner,” quipped Matthew Turak, group president of insurance at CAA Club Group, during a recent webinar hosted by Canadian Underwriter.

Also on the webinar were Aviva Canada CEO Jason Storah and Carol Jardine, president of Canadian operations at Wawanesa Mutual Insurance.

“We are trying to figure out what consumers want,” Jardine said during the webinar, Canada’s P&C Industry in a Post-COVID World, held on Jan. 25. “We are watching [usage-based insurance] and telematics pretty carefully and we are watching companies like CAA launch their offering. We are looking at companies like The Co-operators retire their offering. We have been to Europe and we have talked to insurers that have been using UBI and telematics for decades.”

The take-up of telematics varies by insurer, Storah observed.

“I do think there is a lot of interest in telematics,” said Storah. “But I think there are other, longer-term macro factors that are going to impact the auto insurance market in the next three to five years that we have also been talking about as an industry – whether it is electrification, whether it is the sustainability of vehicles, the usage of vehicles, [or] the number of vehicles on the roads.”

The Canadian Automobile Association has surveyed its members to gauge their interest in telematics, suggested Turack. Five years ago, there was less interest than today because many CAA survey respondents were worried about a “Big Brother watching” type of device, said Turack. At the time, fewer than one in three respondents were interested.

But when CAA did a similar survey in 2020, about 60% of its members were willing to explore UBI as a way of saving money.

“The auto insurance market in Canada is one where you have to take a long-term view, because it can pivot quite quickly on reform,” Storah said  during the webinar. “It can pivot quite quickly on changes in frequency, and changes in customer behaviour, and people using after-market parts versus [original equipment] manufacturer parts and the cost differential there.”

Feature image via iStock.com/gahsoon