Dear Ladies and Gentleman,
Last two months have been of an intense activity on the PAYD proyects.
The most important event has been the annulation of the “Pay As You Drive” proyect for private users of Norwich Union because it was being the main reference for a lot of activities in all the world.
This notice was made a little bit later than the Progressive announcement (which initial project Autograph was the base of the PAYD Norwich one), his experimental system Tripsense would convert in a national project called MyRate.
We will also explain the United States situation, where there is a deep argue about the suitability of PAYD systems.
We will also refer to the activities in France, where Groupama, Maaf y Solly Azar are quickly making their projects public.
At last we will try to make some conclusion about what is taking place with this project and which could be the success keys.
About the Norwich project, it was already known that it wasn´t rearching the market share previously thought. It seems that it was a product hard to sell because it was only a third-party insurance and there was an important uncertainness about the possible use that could be given to the information obtained by the system.
On the other hand the maintenance of the entire system represented a very high cost, we must remember that Norwich managed all technological aspects of the project by themselves. It had small chances of changing in a medium term and also the provided information by the project was very committed, passing through several companies for its treatment and it would have been very bad to repeat another experience like the one they had recently with data protection and the Financial Services Authority.
The truth is that the Norwich project was very well prepared, it included additional services directly offered by Trafficmaster and RAC and had a excellent marketing planning, having made an enormous effort for lot of years.
What failed?
Firstly it was scheduled that car manufacturers assemble the devices at source. There was a moment of euphoria when the English government decided to introduce the same system for tax collection related to traffic, which was followed by a big disappointment when the 3 million people protest made this concept was abandoned. And last, we came to the conclusion that, without any legal or car manufacturers synergy, it is not probable that the general market will accept massively to monitor its position and speed systematically.
In relationship with Progressive, we should follow their activities very closely because it is not foreseeable mistakes in their approaches. We must remember that it was rehearsing the Autograph system for years, which once left the GPS system began work on an experimental system called Tripsense that had no GPS but a lot of information about how and when the car was used and now this system renewed with a specific hardware and incorporating a telecommunications system has become the project MyRate to be offered throughout the United States.
We also have GMAC, which provides a policy based only on the mileage but exclusively for the G.M. OnStar system customers. The insurance company says that the only information it receives the system is the odometer reading.
In the U.S. there is a high political awareness about the issue of CO2 emissions and PAYD system is regarded as one of the best alternatives, and is challenged only in so far as to the possible loss of privacy that certain information brings. This is the reason why the two insurance companies ignore the location information and transmit only aggregate information in long periods of use. Although the GMAC case this is not exactly like this because the system transmits a lot more information to the system that manages ON STAR services.
In France we have several examples of how the market is developing. In less than six months, we have gone from not having anyone providing this type of policy to have several more than three ready to be launched.
We have a small business Solly Azar which has virtually copied the model of the policy Drive Time from More Than and that is geared to the young customers niche, charching per kilometre and trying to avoid driving at night.
Maaf has opted for a typical test limited to 3000 customers, which offers a discount. As partner has chosen Masternaut, we must remember that along with Cybit is one of the suppliers approved by Norwich for insurance PAYD professional.
And then we have Groupama, which launches its PAYD insurance policy through a new brand Amaguiz, in order to avoid that its own customers are those who opt for this alternative and if something goes wrong not to endanger its image. It also proposes a turnover linked to the number of kilometers . None of these three cases is transmitted the speed or the position of the vehicle, despite the fact that some of these equipments incorporate a GPS system because are standard terminals.
If we try to draw conclusions from the projects and tests that have been done, we should:
1. Only the distance is not a meaningful indicator of risk, if not dealt with the times, kind of way, speed, violence in the driving or other parameters really linked to risk.
2. Efforts should be made to minimize that sensitive information would be transmitted in detail.
3. It is not logical to pretend the insurance companies are the ones that develop this application, spending small fortunes and tremendous efforts in testing with some technologies that have no need to acquire.
4. There is a niche of private market who has no problem in letting the insurance company have access to information of their vehicle use.
5. There are many niche markets that value sufficiently certain advantages offered by the geolocation (fleets, company cars, leasing, antitheft, etc.) to admit it, and consequently be open to a kind of insurance policy with PAYD Detailed information.
The technology is reducing tremendously the costs of devices with embedded software and geolocation services that can be offered through them. A special hardware solution dedicated to the implementation of PAYD is possible only for very ambitious projects.
If somebody wants that their address is erased of my distribution list, please return me this message with the word “DELETE.”
As always, I have upgraded my “Pay As You Drive Directory ” and my News Bulletin.
Yours sincerelly
