Insurance telematics is increasingly common globally and there will be more than 100 million policies, generating more than $68 billion in premiums by 2020, according to “Usage-Based Insurance Global Study 2013,” from Ptolemus Consulting Group.

“The present model, based on the mutualization of risks, no longer seems to serve well the motor insurance industry. It seems that the industry is moving from a cyclical pattern to a more structural deterioration of business conditions,” Ptolemus said in the report.

Among the many factors incenting the insurance industry to adopt UBI/telematics models is that the mutualized risk model no longer is perhaps not sustainable, Ptolemus said, due to several factors, including that:

Low mileage drivers subsidize high-mileage drivers.Careful drivers subsidize aggressive drivers. Honest drivers subsidize fraudsters. Better protected drivers subsidize those with minimal coverage. Customers without cars pay for those who own a car, as other insurance activities subsidize the automobile insurance business.

In addition, auto insurance is decreasingly profitable — even as the number of claims decrease and investment returns continue to stagnate, claims costs increase and fraud continues to rise. Also, the number of drivers, especially among the young, is decreasing in many countries.

Insurance telematics, also called usage-based insurance (UBI), programs now are being rolled out in Australia, Canada and India, and soon will be available in Latin America and Russia, Ptolemus said.

In the past 18 months, Ptomelus said:

Progressive has doubled the number of UBI customers to 1.4 million. There now are seven insurers/brokers with more than 100,000 telematics customers, three of which are in the United States and four of which area in Europe. Insurers are launching telematics programs in Australia, Kenya, India and Belarus. The European Commission has published the implementation acts of eCall, a mobile assistance program, which mandates use across Europe starting in October, 2015. Autoline’s smartphone-based policy, launched in Northern Ireland, has helped reduce claims by more than 50 percent.

In Europe, insurance telematics emerged in 2006, and by July 2013, there were more than 2.1 million subscribers, mostly concentrated in Italy, the UK, France and Spain, Ptolemus said, and a number of models have evolved, including those that appeal specifically to young drivers. “Young drivers are the perfect target for European trials since they pay more, have more accidents and care less about privacy,” Ptolemus said.

In the United States, Ptolemus said programs have been aimed at the general public, and that customer adoption has been underestimated. “Nationwide predicted that 10 percent of their new sales would take up the device offer. In their initial pilots, the actual rate was nearly 30 percent,” Ptolemus said, and in certain states it has been as high as 50 percent, whereas the company had predicted 10-to-15 percent. Ptolemus credited the success to advertising by Progressive, the lack of privacy concern on the part of younger drivers, recession, which has motivated people to economize and the rush of offers.

On the part of carriers, early adopters have had the advantage of attracting safer drivers; smartphone applications, which are anticipated to soon launch will emphasize that trend, Ptolemus said. Further, customer retention has been enhanced by the programs, which frequently include two-year terms of services and incentives for families to combine assets into a single insurance contract.

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