This document provides an overview of usage-based insurance (UBI) and the connected car services market. It discusses the basic principles of insurance telematics, how UBI uses dynamic driving data like distance, time, place, and behavior to evaluate risk. It examines case studies of several UBI providers that have seen claims reductions and premium discounts. It also outlines the growing global UBI market, potential for third parties like automakers to offer additional services using vehicle data, and concludes that insurance is well-positioned to connect most vehicles and accelerate synergies between services.

1. PTOLEMUS Consulting Group
Insurance: the most profitable
connected car service
ConnecteDriver, Brussels,
January 2014 - ©PTOLEMUS - All rights reserved

2. Usage based insurance/ quick definition
What is insurance telematics?
Its basic principles
The driving risk star
• Most current insurance
policies use static / statistical
criteria to evaluate drivers'
risks - Age, gender, vehicle
make & age, place of residence,
occupation, etc
• Insurance telematics is a
policy based on these criteria
and 4 new dynamic
parameters
Distance
Static
criteria
(statistical)
Driving
behaviour
Source: PTOLEMUS
Time
Place

3. Usage based insurance business case: claims
Insure the box demonstrate the business case for UBI as a
connected service
• Since 2010, insure the box
provides PHYD insurance to
young drivers. Average
premium £1600/y
• It has sold around 125,000
policies, entirely online
• It indicates that 95% of its
customers get reductions on
renewal averaging 34% based
on their driving experience
• Its incentives for safe driving
have reduced accidents
among 17- 21 year olds by
35-40%
PTOLEMUS
3

4. Usage based insurance business case: relationship
Ingenie has created a strong relationship with its customer
base
• Twitter campaigns reach of 2 to
3 million
• Campaigns drive web traffic
• Smartphone application
feedback every 10 days, after 40
miles driven
• Black messages sent on the same
day
• 89% checked their message in
the last 14 days
• Average interactions: 6/months
PTOLEMUS
4

5. Usage based insurance business case: VAS
Sparkassen (S-Direkt) designed its model
around Value Added Services
• S-Direkt partnered with local operator
Telefonica to provide a service-based
offer
• Deutsche Assistance (eCall, bCall)
• Masternaut (theft tracking)
• Smartphone-based driver feedback is
handled by Telefonica.
- Where is my car service
- Reduced social interactivity
- Best driver contest
• Limited discount to 5%
• 2 Channels: aggregator and direct
• The German market is sensitive to
privacy, safety and vehicle theft.
• Telefonica adapted the architecture to
separate the driver data and the insurance
rating and rescue services.
PTOLEMUS
Source: Unipol, PTOLEMUS
5

6. The UBI market today
The market for telematics insurance is now global
Canada
Europe
- Desjardins
- Admiral
- Ingenie
- Allianz
- Insure the box
- Amaline
- Linear
- Aurora
- Mapfre
- Axa
- SparKasse
- Aviva
- Industrial Alliance
- Reale
- Co-operative - Sara
US
- Coverbox
- Am Fam
- Unipol
- Generali
- Allstate
- The AA
- Direct Line
- AAA
- Zurich
Japon
- AIOI
- Farmers
- Sompo
- GMAC
- Liberty Mutual
- Mapfre
Australie
- Progressive
- AI Insurance
- Safeco
- StateFarm
- The Hartford
- Travelers
- USAA
Afrique du sud
Mexico
- Discovery
0
PTOLEMUS
Source: PTOLEMUS
1
2
5
10
20
- MiWay
- Hollard
- GNP
- OutSurance
40
6

7. Insurance telematics market drivers - Technology
Insurance interaction with the driver can take many shapes
Possible technologies for vehicle connected services
Black box
Digital
tachograph
Aftermarket
FMS box
OBD device
Self-energised
connected modules
Cigarette-lighter
device
Drive Cam
PND
Speed camera locator
Smartphone
Smartwatch
OEM
system
Supplier
system
Semi-embedded system
Vehicle keys
OEM
Smartwatch
Line-fitted
Fixed
PTOLEMUS
Source: PTOLEMUS
Removable
Portable
7

8. Insurance telematics market drivers - Technology
Fraud can take many shapes
• UBI technology does not solve everything
PTOLEMUS
The video can be seen here: http://youtu.be/YlTFlxI1RuE
8

9. Insurance telematics market drivers - Technology
...Yet very very few are used today
Possible technologies for vehicle connected services
Black box
Digital
tachograph
Aftermarket
FMS box
OBD device
Self-energised
connected modules
Cigarette-lighter
device
Drive Cam
PND
Speed camera locator
Smartphone
Smartwatch
OEM
system
Supplier
system
Semi-embedded system
Vehicle keys
OEM
Smartwatch
Line-fitted
Fixed
PTOLEMUS
Source: PTOLEMUS
Removable
Portable
9

10. Usage Based Insurance’s use of car data
More service providers are harnessing car data
Increasing range of services offered
CAN data accessed by the device
PTOLEMUS
Source: PTOLEMUS, Progressive, Allianz, Audiovox, Mobile Devices
10

11. Usage Based Insurance’s use of car data
New services are now offered around the OBD dongle
Data include:
Services include:
- Mileage
- Airbag
- eCall
- Mileage (leasing)
- Fuel level
- Body
controller
- bCall
- Fuel level
- Powertrain
- Fuels saving
- Diagnostic
- Door control
- Driver scoring and - Crash detection
rewards
- Fleet tracking
- Smartphone use
restriction
- RPM
- Crash
detection
- Alignment
- GPS data
- Driving events
- VIN
- Driver log
Increasing range of services offered
- Geofence...
CAN data accessed by the device
PTOLEMUS
Source: PTOLEMUS, Allianz, Audiovox, Mobile Devices
11

12. UBI potential for third parties
The car makers can harness UBI to provide added value
• OEMs can become Car Service
Providers
- Use eCall as a plateform
- Recurring relationship with
customers, meaning increased trust
- Numerous new revenue
opportunities
• Insurance can become the number
1 source of connected revenues
- Most of them already sell financing to
their customers. Insurance is the next
step
- Multiple services can be sold
together with UBI, notably bCall,
SVR, roadside assistance, etc.
Source: PTOLEMUS
7

13. UBI potential for third parties
Creating a service in partnership with an
insurance
• Define the roles and branding:
- who is the customer-facing insurance provider
- Can multiple insurers offer insurance for a given vehicle
• Define the model or models:
- What type of data will be shared? Raw, filtered, score...
- How will driver and vehicle data be delivered
• Define the device and technology
- Embedded, customer owned or smartphone?
- What sensors can be used accelerometers
- Cost and maturity
9

14. Conclusion
Insurance has the potential to connect most vehicles
• Telematics is not compulsory,
Insurance is
• OBD devices are becoming car data
centric service platforms
•Insurers will continue to push for
more reliable and efficient accident
detection and analysis technologies
•A model of data exchange between
various stakeholders will facilitate the
take-off of the embedded UBI industry
• UBI will accelerate synergies
between connected services and
improve usage rate
23

15. Introduction to the 2013 study
The UBI Global Study paints a truly comprehensive picture
of the UBI market
• 800 pages of rigorous analyses
of the PAYD / PHYD market
based on:
-
201 interviews in 18 countries
330 figures and charts
3 years of hands-on experience
Our knowledge of the ecosystem
incl. OEMs and TSPs
• 38 case studies including Allianz,
Amaguiz, Cobra, Coverbox,
Insurethebox, Ingenie, OnStar,
Hollard Insurance, Insurethebox,
Liberty Mutual, MAIF-MACIF,
Norwich Union, Octo Telematics,
Progressive, Quindell, State Farm,
Unipol, Uniqa, Zurich
• A strategic analysis of the value
More than a research
report; a real strategic
market analysis
PTOLEMUS
chain evolution including
- The impact of eCall
- The role of the smartphone
- The new patents and partnerships
* Italy, the UK, France, Germany, Russia and the US
• A handbook of 44 suppliers'
solutions including our own
evaluation and ranking
• 10-year market forecasts
- Country forecasts for Canada,
China, France, Germany, India,
Italy, Japan, Russia, South Africa,
the UK and the US
- Bottom-up estimates of the number
of policies for each insurer in the
US, the EU and in South Africa
• Telematics insurer market
models
- Markets’ readiness to UBI for 20
countries
- Analyses* of the insurer's business
models in 6 countries
• A complete set of
recommendations for insurers,
regulators, TSP, OEMs and
operators
3

16. PTOLEMUS in a nutshell
PTOLEMUS is the first strategy consulting firm focused on
telematics and geolocation
Our consulting services
Our fields of expertise
Investment
Evaluation
Procurement
strategy
New market entry
Business plan
development,
Board coaching
and support
Due diligence,
Market
assessment,
Feasibility studies
Specification
requirements,
Tenders
publications,
Supplier negotiation
& selection
Innovation
management
Business
development
Product & services
development,
Roadmap and
launch
management,
Patent strategy
Partnership
strategies,
Response to
RFPs, RFQs,
Lobbying
Strategy
definition
PTOLEMUS
Implementation
Project &
programme
management,
Risk analysis &
mitigation strategy
Mobile content and social networking
Application stores, crowd-sourcing, etc.
Navigation & location-based services
Maps, traffic, fuel prices, speed cameras, parking, etc.
Usage-based charging
PAYD / PHYD insurance, Road User Charging,
PAYD car leasing & rental
Telematics & Intelligent Transport Systems
Connected car, tracking, fleet management, eCall, bCall,
Stolen Vehicle Recovery, Car As A Service, connected train,
etc.
Positioning / Location enablement
M2M & connectivity
16

17. PTOLEMUS in a nutshell
Who we have helped
Telecom operators
Telecom infrastructure suppliers
OEMs & telematic vendors
Content & application providers
OBD2 Bluetooth Dongle basic compatible car models
ITS operators &
regulators
Consumer electronics makers
Positioning solution providers
Fleets
Fleets
Insurers & assistance providers
Financiers
Montezemolo
& Partners
PTOLEMUS
17
2012 Directors’ report
(translation from the Italian original
which remains the definitive version)

18. PTOLEMUS Consulting Group
Strategies for Mobile Companies
Brussels - Paris - London - Milan - Munich - Chicago
thomas@ptolemus.com
www.ptolemus.com