Telematics solutions offer valuable insights into risk assessment and are transforming underwriting processes across the landscape of commercial insurance. As commercial carriers explore the integration and expansion of telematics within their organizations, a crucial decision arises: to build an in-house aggregation solution or to partner with a third-party telematics data aggregator?
To assist commercial carriers in making this pivotal decision, we present a comprehensive guide: “ Navigating Telematics Deployment Methods: A Decision-Maker’s Guide for Commercial Carriers”. This guide is intended to educate commercial insurers on the basics of telematics aggregation and the most important things to consider when planning to expand your UBI offering.
As fleets add telematics devices to their operational toolkits the data available for insurers to tailor Usage-Based Insurance (UBI) coverages for policyholders increases. The savvy insurer will jump on this opportunity to offer more personalized coverages and manage their risk more efficiently.
Carriers looking to establish or scale a telematics program have a few distinct options:
- Developing or supplying a mobile app or hardware
- Partnering with one or more telematics service providers (TSPs) or original equipment manufacturers (OEMs)
- Accessing data from their policyholders’ devices with the help of a telematics aggregator
Our guide delves into a few of the most important things to consider when choosing which route to take as you grow a telematics program within your organization. It explores cost, time to impact, technical expertise, data harmonization and scalability as the five primary considerations commercial carriers should keep top of mind as they expand their telematics program in an impactful way.
Knowing When to DIY vs. Buy
In an article by John Barbagallo, former President of Commercial Lines at Progressive and Special Advisor to SambaSafety, is quoted as saying, “A source-agnostic solution ensures that insurers are not tied to a specific technology or data format. This flexibility is crucial in a rapidly evolving technological landscape, enabling insurers to seamlessly ingest and adapt to new devices and data sources.” This touches on both the topics of data harmonization and scalability, which are discussed at length in our guide.
Insurers with deep telematics experience and even deeper pockets may be lured to expand their telematics program by building their own data aggregation solutions, but it will take time – likely years – before they will be able to reach parity with a 3rd party aggregator. Newcomers to the space and carriers looking to make an impact with speed and modest financial investment, however, are keen to partner with an aggregator that has a plethora of well-established integrations with telematics service providers across the commercial mobility industry.
As connected fleets grow so does the volume and type of telematics data available to commercial insurers, making it a prime time to invest in telematics. The primary questions insurers should ask themselves when deciding whether to DIY or invest in telematics data aggregation services become how broadly and how quickly the organization plans to scale their UBI offerings. The best answer to those questions, and most others, can be found by looking at the market.
According to a report by Strait Research, “the global insurance telematics market size was valued at $2.75 billion in 2021 and is predicted to reach $12.7 billion by 2030, increasing at a CAGR of 18.53% from 2022 to 2030.” Based on these estimates, insurers should prioritize their scaling efforts for their UBI offerings in order to remain competitive and grow in market share.
The guide aims to empower commercial carriers with the knowledge needed to navigate the complex terrain of telematics aggregation. Whether you’re a seasoned player in the insurance industry or an emerging force, understanding the challenges and benefits associated with establishing a robust telematics program, whether built or bought, is pivotal.
Telematics is not just a technology; it’s a strategic move toward an inevitable data-driven future in commercial insurance. It should be embraced with enthusiasm and planned for with thoughtfulness. Our guide provides the compass you need to navigate this transformative journey, helping you make choices that align with your business goals.
Ready to explore the possibilities? Dive into our guide and unlock the potential of telematics for your commercial insurance endeavors. The road to innovation starts here and SambaSafety will be with you every step of the way.