Telematics in Insurance
Telematics and Usage-Based Insurance Faces Market Limits; Value-Added Services May be Key to Growth
New executive brief from Novarica provides updated market assessment, overview of expanded vendor market
Boston, MA (July 15, 2016) – Telematics and usage-based insurance is becoming mainstream at insurers, and the number of programs doubled between 2010 and 2015. A focus on services-based programs, and not discounts, will be a crucial differentiator as insurers look to increase customer adoption and market growth. Research and strategic advisory firm Novarica examines the current market and how insurers can increase customer adoption of UBI in its latest executive brief.
"Awareness for telematics and UBI has definitely increased in the last couple of years," notes Thuy Osman, Research Manager at Novarica and lead author of the brief. "More insurers are conducting pilots or rolling out their own UBI programs, and the number of solution providers in the market also grew tremendously. We're at a point now where differentiation between UBI programs is key to customer adoption. The discount alone is not enough to attract the wider audience that's needed to drive the UBI market forward."
Key findings of the brief include:
- UBI market penetration is lower than predicted (<5%). However, many expect market penetration to be above 10% by 2020.
- Expanding the UBI customer base may require a review of the value proposition. The discount model was successful when UBI was new. With increased awareness in the market, insurers may want to move beyond the discount to focus the conversation on value-added services and customer experience.
- New entrants as well as mergers and acquisitions are shaping the vendor marketplace. Vendors are merging to stay viable and partnering to offer a full range of UBI services. OEMs, telecoms, core systems providers, and new smartphone apps providers are entering UBI market.
Desk copies of the brief are available to qualified media.
Novarica helps more than 80 insurers make better decisions about technology projects and strategy. Its research covers trends, best practices, and vendors, leveraging relationships with more than 300 insurer CIO members of its Research Council. Novarica's advisory services provide on-demand phone and email consultations on any topic for a fixed annual fee; its consulting services include vendor selection, benchmarking, project assurance, and IT strategy development, providing rapid, actionable insights and guidance, delivered directly by the firm's senior team. For more information, visit www.novarica.com.
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