“Usage Based Insurance” Bulletin March 2011

Dear Ladies and Gentleman,

Without any doubt the most important new on Usage Based Insurance, has been the launch of an advertising campaign in a nationally way for the Snapshot policy and the use of agents to marketing it.

This will have a direct and immediate impact on sales, my estimate is that Progressive would be now selling about 10,000 Snapshot policies a month and that this figure could easily quadruple.

The other effect is an acceleration in the process of approval in other states due to pressure from the demand that is going to induce. We can even see that the State is considering enacting the kind of information that the insurance company must supply to eliminate potential problems like that is occurring in Pennsylvania.

The policy Snapshot is a revolutionary product, capable of offering very competitive policies to a very important and profitable segment of the market. In a comparative study of Nevada government you can see the profiles of customers who get savings by contracting with Progressive.

Returning to the issue of Allstate and its DriveWise project. The acquired patent of Innosurance doesn´t seem to have enough consistency by itself to fend off a possible lawsuit from Progressive. So I wonder if there will be a relationship between this project and the in-Drive application of Hughes Telematics, with which they are open some legal proceedings.

In Europe the revolution comes from another very different source. The European Court of Justice has determined that it is illegal to use the genre to segment the market for car insurance, it is easy to extrapolate that the same can apply to any information that contains a mere personal meaning, such as marital status, number of children, training, age, etc.

So far, this had been one of the most important criteria in setting insurance rates, so it is expected that insurance companies accelerate their UBI projects, in order to seek more consistent information to segment the market.

It is interesting what is happening in Germany, where insurance companies traditionally have thought he had to wait for the car manufacturers equip their vehicles with telematics terminals to offer insurance policies which use the information obtained from these terminals. It’s something that sounds pretty consistent, but what is happening is that as early as starts the first step (the e-Call), the insurance companies have realized they lose contact with their client in favor of the manufacturer or even other service companies, so they are urgently taking up the issue of equipping the vehicles with their own devices.

I recommend reading the interviews contained in the following publication of TelematicsUpdate

As always, I have upgraded my News Bulletin and Delicious Bookmarks. You can find older information in “Pay As You Drive” Directory.

If somebody wants that their address is erased of my distribution list, please return me this message with the word “DELETE”.

Yours sincerely.

“Usage Based Insurance” Bulletin February 2011

Dear Ladies and Gentleman,

As we mentioned repeatedly last year, OnStar, the undisputed world leader in telematic services, opens his bid to all vehicles in general, which moves him to a very favorable position compared to other car manufacturers, which start now the path that GM took 15 years ago.

With respect to “Usage Based Insurance” offers which may be linked to this application, currently they have the limitation to access only to the traveled miles. Very few information to estimate the risk in driving (for example, night driving by a local road is 50 times more dangerous than in a highway driving in valley hours). OnStar is obviously very jealous in safeguarding sensitive information from their customers but somehow have to find a satisfactory solution. Moreover, and this is not a minor factor, insurance companies have to create databases with information on the use of the vehicles to enable them to draw conclusions and to hone their risk estimation parameters.

The article “Pay-As-You-Drive Insurance Goes Into High Gear” is a successful exhibition of its development in the U.S. market.

It’s very interesting to see what is happening in France, where the reaction to the PAYD offer was the massive supply of kilometer vouchers, therefore the PAYD applications have been restricted to Solly Azar and Amaguiz. This has involved a major distortion in the pricing, we will have to see how it evolves.

In recent months there have been several projects that propose the integration of Smartphones in the telematic services, in some cases with access to vehicle information and other in complete autonomy. Some of them offer PAYD solutions that involve a minimal investment. The German Insurance Company WGV made an experimental development in this line some years ago.

It is very curious the proposal from the insurance company American Family to incorporate visual surveillance to young drivers.

You can find in Delicious more news, but I cannot ignore the integration of Martin Otter in Trimble and his involvement in the Zurich Fleet Intelligence project. I am sure that we will have to talk about Trimble very often.

As always, I have upgraded my News Bulletin and Delicious Bookmarks. You can find older information in “Pay As You Drive” Directory.

If somebody wants that their address is erased of my distribution list, please return me this message with the word “DELETE”.

Yours sincerely.
 

Salvador Minguijón Pérez.
Interim Management.
+ 34 649 49 17 70
+ 34 976 59 58 71
Email: s.minguijon@salvador-minguijon.es
Web: http://www.salvador-minguijon.es

“Usage Based Insurance” Bulletin January 2011

Dear Ladies and Gentleman,

From this year I started using Delicious to record the relevant documents, relating to “UBI” projects, which have been published on the web. This tool allows you to make more powerful and flexible searches and offers a pleasant working environment, I hope you find it useful and invite you to subscribe.

The database “Pay As You Drive Directory” will keep all information published before 2011.

A very important news is that the lawsuit against Mapfre because infringement of the patent ES 2108613 has been rejected, in my Blog in Spanish you will find an explanation of the decision and the reasons why the sentence has been appealed.

Basically the sentence assumes that the activities of an insurance company can not infringe on patents, acting under Article 52 (1) EPC that prevents non-technical concept patents and this despite the fact that the insurance company put in the vehicle of their customers telematic terminals and forces them to hire a telematic service in conjunction with their insurance policy. Nor does it seem consistent with the doctrine of the European court of appeal (section 1.5). We will have to wait 6 to 12 months for a final decision.

With regard to the demand for Progressive against Liberty, is being proceeding to review the patent examination, but it seems very unlikely that this patent can be partially or completely annulled.

It is therefore surprising that Allstate had launched its Drive Wise project, which is an almost exact copy of Progressive MyRate project. To understand it, probably we would have to know who is its technological partner and their contract conditions.

We also see promotional activity by Hughes Telematics Inc (HTI), which holds a patent for the use of OBD interface that is involved in several disputes.

Other news of special relevance is that Amaguiz would have reached 30,000 clients with their project Pay As You Drive

That the City of New York has approved the Snapshot policy of Progressive.

California gives official green light to the projects of State Farm and Auto Club. We can read the motivations that led him to promote this type of project.

I suggest you to take a look at a lovely summary about automobile insurance in the world

To me I was very surprised the announcement that Coverbox will use Quartix equipements, since I assumed that Cobra was one of the Wunelli partners in this project and also I’ve always thought that this one was the best positioned supplier to compete with Octotelematics.

It is quite possible that the frenzied activity of Insurethebox would be not stranger to what is happening between Wunelli and Cobra.

In Germany there is hardly any activity on projects UBI, Novelties has released a report that helps us understand the circumstances of this market.

Telematics has convened a conference for May on UBI systems in Europe that has a very impressive speakers panel. It’s certainly a highly recommended event.

As always, I have upgraded my News Bulletin.

If somebody wants that their address is erased of my distribution list, please return me this message with the word “DELETE”.

Yours sincerely.
 

Salvador Minguijón Pérez.
Interim Management.
+ 34 649 49 17 70
+ 34 976 59 58 71
Email: s.minguijon@salvador-minguijon.es
Web: http://www.salvador-minguijon.es

2010 in review

The stats helper monkeys at WordPress.com mulled over how this blog did in 2010, and here’s a high level summary of its overall blog health:

The Blog-Health-o-Meter™ reads Fresher than ever.

Crunchy numbers

A helper monkey made this abstract painting, inspired by your stats.

A Boeing 747-400 passenger jet can hold 416 passengers. This blog was viewed about 4,100 times in 2010. That’s about 10 full 747s.

In 2010, there were 13 new posts, growing the total archive of this blog to 56 posts. There were 4 pictures uploaded, taking up a total of 142kb.

The busiest day of the year was July 27th with 182 views. The most popular post that day was “Usage Based Insurance” Bulletin March 2010.

Where did they come from?

The top referring sites in 2010 were linkedin.com, salvador-minguijon.es, terra.es, segunconduzcas.wordpress.com, and counter.bestproceed.com.

Some visitors came searching, mostly for usage based insurance, pay as you drive, cobra wunelli, payd talking point, and pay to drive.

Attractions in 2010

These are the posts and pages that got the most views in 2010.

1

“Usage Based Insurance” Bulletin March 2010 March 2010
1 comment

2

First “Usage Based Insurance” patent infringement lawsuit March 2010
3 comments

3

“Usage Based Insurance” Bulletin August 2010 August 2010
1 comment

4

“Usage Based Insurance” Bulletin October 2010 October 2010

5

“Usage Based Insurance” Bulletin September 2010 September 2010

“Usage Based Insurance” Bulletin November 2010

Dear Ladies and Gentleman,

The interest of the United States government in the development of UBI applications comes into practice in the availability of 10.5 million to support PAYD insurance and other pricing applications that do not involve tolls.

Perhaps this and the success of Progressive is what motivates OnStar to try to promote their system on insurance companies, which until now has only had a mere token presence (20,000 Clients).

As I have recently commented on my blog in Spanish, the Snapshot product has transformed the UBI Insurance, it is not longer a niche product, but a general market product. My personal opinion is that now Progressive could have more than 250,000 customers and would be growing at around 15,000 polices per month.

Regarding the market situation in Europe, the one of Watson Towers on private car insurance in England are very interesting views, which states that losses will be kept until 2015, Le Figaro emphasises the boom of the segmentation in response the deterioration of the market and Aseguranza in Spain takes the view that the sector could come in losses in 2012 and that payment for use is an appropriate response to this situation.

I recommend all interested in the subject to read the 10 myths that Dave Huber has published in the Linkedin PAYD group. I think you have to register to access it but I assure you it is worth. And as has become almost a habit, also this month we have a very interesting publication of EMB.

On day 11, the trial was held by the patent infringement lawsuit against Mapfre, we expect a decision before the end of the month. It is difficult that any of the parts are resigned to lose, so it is likely an appeal of the sentence to a higher court. This will prolong the process on about 6 months if no agreement is reached between the parts.

I’ve always thought that Cobra could become the more fierce competitor of Octo Telematics. So far only involved in the Coverbox (Wunelli) and Easy Drive (Solly Azar) commercial projects, but their agreement with Genertel (Generali) may involve a change in the pace of the game.

As always, I have upgraded my “Pay As You Drive Directory” and my News Bulletin.

If somebody wants that their address is erased of my distribution list, please return me this message with the word “DELETE”.

Yours sincerely.
 

 
Salvador Minguijón Pérez.
Interim Management.
+ 34 649 49 17 70
+ 34 976 59 58 71
Email: s.minguijon@salvador-minguijon.es
Web: http://www.salvador-minguijon.es

“Usage Based Insurance” Bulletin October 2010

Dear Ladies and Gentleman,

Robin Harbage.

One day we told that the incorporation of Harbage to EMB would print a different rhythm to the project “Usage Based Insurance“. The recently released documents “Competitive Edge“, “Tips for Identifying Niche Markets for personal, commercial coverages” and “Learn how to prepare for usage based insurance roll-out” are a clear example of this activity. It doesn’t appear that the patent infringement lawsuits have diminished the interest of U.S. insurance companies, and in any case, have encouraged recourse to consultants in order to define the projects.

U.S. Patents.

We have already said that Progressive had denounced Liberty. Now Hughes Telematics Inc has threatened several insurance and technology companies, among which was Xirgo, who is the current provider of Progressive. This one has seen his project threatened and has initiated legal procedures for the revocation of Hughes patents, based on several prior patents, including his own.

Mark Nowotarski has published an interesting study on the application and granting of patents related to U.S. Insurance.

Progressive.

It remains to be very difficult to get information on the evolution of Snapshot project, but we can get an idea looking at page 8 of the presentation to the National Association of Insurance Commissioners along with the Progressive last report to shareholders that reflects an increase of 600,000 policies in the last 12 months. I guess that over 20% of these policies correspond to MyRate. Snapshot approach will have an explosive effect because it eliminates all the disadvantages of the MyRate project.

Uniqa now in Bulgaria

He was one of the pioneers of PAYD in Europe, the project Safeline has 20,000 car customers and also has a product for motorcycles. Keep in mind that Austria has only 8 million inhabitants. No trouble yourself to find out who is behind its supplier Dolphin. Octo! Of course!

More News.

I recommend the Roger Lanctot chronicle about the recent event in Chicago.

The Electronics Department at the University of Alcala de Henares in Spain, published the broad outlines of a project PAYD. I have followed their work for over 10 years and they own several patents and always bring new ideas. Certainly would be a great collaborator if given the opportunity to participate in a commercial project.

According to the experience in California, it seems clear that it needs something more than just the mileage information to structure an UBI offer.

News on IVOX, SKYMETER, ISO, TOWERGATE, NAVTEQ, EUROFOT, INSURETHEBOX.

These proposals of V.W. and the E.U. can give us an idea of the amount of information that can be taken into account when assessing risk in a car.

As always, I have upgraded my “Pay As You Drive Directory” and my News Bulletin.
If somebody wants that their address is erased of my distribution list, please return me this message with the word “DELETE”.

Yours sincerely.

Salvador Minguijón Pérez.
Interim Management.
+ 34 649 49 17 70
+ 34 976 59 58 71
Email: s.minguijon@salvador-minguijon.es
Web: http://www.salvador-minguijon.es

“Usage Based Insurance” Bulletin September 2010

Dear Ladies and Gentleman,

The consulting company A.T. Kearney has published an article, short but comprehensive, on the Usage Based Insurance. I would add three factors that can have a major impact: first, as we discussed in an earlier publication, is the possibility of not using the telematic terminal permanently. Secondly is the response of the forfait (flat rate limited) as an alternative product and third is the important niche that make up fleet vehicles.

In France we have been observing that, given the good reception of emerging projects based on telematic systems, several companies have chosen to offer kilometer forfaits, insurance policy limited for a number of kilometers (typically about 8000), AXA and Allianz, the two major European market leaders, have joined this trend. It’s hard to imagine the consequences this will have, because if it is true that there is a relation between the mileage and risk, so is that the correlation is much stronger with other data as when do you drive, the type of route by which it is moving or the violence of the maneuvers. Companies who make use of this solution could incur in the risk of adverse selection to the market.

On the subject of fleets, is a market that is developing slowly and quietly, while the market potential is the tenth part of that of the general public, has a special quality connotations derived from its social and economic importance, that turns it into an easily accessible market niche.

Recall that Aviva sold this product before the wellknow PAYD policy and when canceled it, continued to develop the fleet market with its product Fleetwise Care.

Can you imagine who’s the current provider of telematic equipment? Octo Telematics … of course!! Who, incidentally, just won an award from Frost and Sullivan !!

Now, Octo has exceeded the previous leader Qualcomm in the number of aftermarket terminals installed. And this one finally wakes up with a development for insurance companies.

The activity of the technology companies is frenetic, the ones who have submitted the latest news are:
Agnik, Continental, Walsh Wireless, Mobile Devices and Numerex.

I want to highlight two very creative proposals, which I believe they have the potential to be developped very positively, the first based on augmented reality and the another, presented by Ars, in face recognition.

But the real telematics leader is GM with its OnStar system, which is taking action against the imminent onslaught of competitors who have developed similar products, once they begin to have a clear government support.

I remind you that you can access to a more comprehensive list of news compiled in the last month in http://salvador-minguijon.es/home_archivos/Pay_as_you_drive_directory.htm .

As always, I have upgraded my “Pay As You Drive Directory” and my News Bulletin.

If somebody wants thar their address is erased of my distribution list, please return me this message with the word “DELETE”.

Yours sincerely.

Salvador Minguijón Pérez.
Interim Management.
+ 34 649 49 17 70
+ 34 976 59 58 71
Email: s.minguijon@salvador-minguijon.es
Web: http://www.salvador-minguijon.es

“Usage Based Insurance” Bulletin August 2010

Good heavens!

Behind the seemingly innocent name change of the MyRate by the Snapshot project lies an idea that will revolutionize the concept of the Usage Based Insurance.

To do without telematics device !!!

Experience finds that, after a learning time, user habits and risk have very little variation. So Progressive wondered if it is profitable to bear permanently the telematic device and the costs of the information management. And the answer has been no.

The Progressive’s new approach is to install the telematic terminal for a period of six months and then remove it, reserving the right to ask the customer to reinstall it to verify that his habits and risk have not changed. Their experts in DataMining will lay the criteria for these inspections down, but it seems reasonable to think that it won´t be necessary more than six months every three years. Reducing the system costs by 83%!

Want to know more curiosities about Progressive?

The first is that they have problems that its project is approved in Pennsylvania because its refusal to document the formulas that they use to calculate the risk, something that they identify as a trade secret, the second is that it is not clear that they will join to State Farm and to Auto Club of Southern California in order to market PAYD insurance in California as they don’t believe that with the only possible mileage information the risk can be properly estimated.

The Progressive experience cannot be directly extrapolated to other insurers because the response of competitors is limited by their patents, their discounts are relatively low, U.S. road infrastructure are very different from those of other countries and its market has an enviable size and homogeneity.

But it is advisable to monitor its evolution because:

They were the first to launch a pilot UBI.
They were the first to use GPS
They were the first to do without GPS
They were the first to connect the device to the OBD bus eliminating the problems and costs of installation
They are the insurance company with more UBI policies.
They have been the first to do without telematic equipment.

Adding its collaboration with Aviva in the definition of Pay As You Drive project, would obtain a share of the merit of being:

The first to incorporate anti-theft
The first to install automatic emergency call
The first to incorporate a assistance call
The first to identify risk factors for young drivers.

They were the second to patent an UBI concept and to claim against an insurance company for infringing its patents.

So far, in Europe the technology companies that were in better position to access to UBI market were those that could “complement” the product with other services that help with the investment. Now, with this idea open up many opportunities for companies that were focused on the detection and correction of driving risk which were looking for a market niche at companies that manage large fleets of vehicles.

As always, I have upgraded my “Pay As You Drive Directory” with the last UBI news and my News Bulletin.

If somebody wants that their address is erased of my distribution list, please return me this message with the word “DELETE”.

Yours sincerely.

Salvador Minguijón Pérez.
Interim Management.
+ 34 649 49 17 70
+ 34 976 59 58 71
Email: s.minguijon@salvador-minguijon.es
Web: http://www.salvador-minguijon.es

“Usage Based Insurance” Bulletin July 2010

Without any doubt the most important news is the demand of Progressive against Liberty for violating its patent 6.06.497 rights with its subsidiary SAFECO project. It was something that was foreseeable, given the expectations that the MyRate project was arising and the manifest unease expressed by Progressive to see that everyone wanted to get on the train that they had started.

It seems difficult that Progressive will license their patents to their closest competitors and it is not easy for these competitors to design products that can sidestep the patents that Progressive has gained in all these years of hard work. So hopefully that will paralyze all UBI projects being developed in the USA.

The short term effects may include:
– A reduction of growth expectations of the UBI applications.
– An increase in billing by mileage insurance, as a reaction to the penetration of Progressive.
– An increase in the UBI activities of American companies in other geographical areas.
– The acceptance of the culture of patents in the insurance sector, which traditionally had been very reluctant to its adoption.

In the conference held in mid-September in Chicago we will see what will be the real impact of the demand for Progressive. It would be interesting to have the presence of Mr. Nowotarsky, an expert on the subject of patents in the insurance sector.

In Europe the situation regarding patents is much more complex, the significant from the point of view of UBI are the ES 2108613, the EP 0700009 and the EP 1481344 and each of them are valid for a certain group of countries, their owners have different interests and constraints, each country maintains its own legal system, there are wide differences in the interpretation of patent law and in the predictability of court judgments among different countries. Despite of all it is not recommended at all to ignore this issue or think that is something that is only responsibility of the suppliers.

We can not forget the Frosh and Sullivan and Ptolomus publications on market prospects in Europe or the publication of EMB on Usage Based Insurance Project.

As always, I have upgraded my “Pay As You Drive Directory” and my News Bulletin.

“Usage Based Insurance” Bulletin June 2010

Dear Ladies and Gentleman,

State Farm, the largest automobile insurance carrier of the United States submitted the draft “Drive Safe and Save” in California that uses the On-Star infrastructure, although in this case are provided alternatives for users who do not have this exclusive GM service.

I interpret this as a defensive measure to the increase in the penetration rate of the Progressive’s MyRate project and the uncertainties of infringing Progressive’s patents with a more developed product.

Either way, it provides us a good opportunity to reflect on the extraordinary potential posed by more than 5 million vehicles equipped with the OnStar system to develop a PAYD project, provided that strictly respects the privacy of the customers, an aspect that is essential for GM.

In my last Spanish blog, I explained the different concepts of UBI billing that are having repercussion in Europe. In particular they are the Progressive’s models with MyRate, AVIVA with the two versions of the “Pay As You Drive” and Sara with its “SaraFreeKm”.

Those who want to delve a little more in the method of calculation of the policies of the MyRate project can take a look at this link.

In the last blog we noticed the success of the PAYD system in France, especially Amaguiz. As a consequence, the CNIL, administrative authority responsable of protecting privacy and personal data, has made some comments on the points that should be respected. Since the information is in French, I do a little summary.

– You can not register any kind of legal infraction

– The CNIL has no objection to insurance companies access to mileage data, vehicle usage time and duration of journey.

– The speed can only be registered in their average value, assuming that the insurance company has an interest in acquiring it.

– If the equipment can not be disconnected by the user, it must be special and specifically informed about this aspect. The CNIL recommends to have a private mode.

– If location information is used, it is recommended that processing is done in the terminal itself. If that is not possible, the service provider should process this information, sending to the insurance company only summarized information and must destroy the personality of the data.

– The position information should not be accessible by the user in case of theft to avoid a possible direct intervention.

– The detection of an accident only serve to trigger the emergency public services.

It seems that the model of Coverbox-Wunelli, telematics platform on which you can contract with several insurance companies is having success and there are many imitators eg Greenroad and Insurethebox. Intelligent Mechatronic System also probably is going in this direction. In fact this type of offer is not very different from the “Low Mileage Discount” option of OnStar.

One of the most interesting niche for UBI are the accidents during working or when going to work. In this case the company and profesionals has multiple motivations for aiming to reduce the number of incidents and encourage more efficient use of the vehicle. Little by little they are launching activities in this regard.

But this month I have recorded many interesting publications. A list of all new you can find it on the first page of my directory.

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 sincerely.

Salvador Minguijón Pérez.
Interim Management.
+ 34 649 49 17 70
+ 34 976 59 58 71
Email: s.minguijon@salvador-minguijon.es
Web: http://www.salvador-minguijon.es