Canadian UBI market in full Indian summer bloom

Date: Tuesday December 10, 2013

Until now, UBI in Canada has been limited to a few programmes, but, in the past few weeks, a string of announcements has turned this almost static market into a hot spot for UBI. We caught up with Blair Currie of UBI service providers IMS, one of the ranked Service Providers in the 2013 Telematics Insurance Supplier Ranking, and looked at the changing landscape…

Canada’s longest running UBI programme, Mobiliz, came from Industrial Alliance in Quebec. Mobiliz allows for premium discounts as well as surcharges, which, according to Blair, is fairly unique in North America. The programme is run by Baseline, which is also behind the Telematics Motorcycle usage-based insurance pilot programme with SGI. More recently, Desjardin, in partnership with Belron and Uniban, also launched a PHYD programme called Ajusto (or Intelauto), which targeted young drivers. Blair also knows about at least three more programmes that are still in the trial stage.

The first ripple of change came in April this year, with Quindell Portfolio’s acquisition of Toronto-based iter8, a provider of SaaS-based solutions to the insurance broker and agent market. Quindell then signed a five-year contract with the Independent Broker Resources Inc. (IBRI), a wholly owned subsidiary of the Insurance Brokers Association of Ontario (IBAO), to provide all aspects of their telematics programme, including the provision of devices, connectivity, product platform, systems integration, logistics, mobile applications, data analytics, call centre services, and consumer-facing interaction.

The programme is supported by 2 underwriters at this stage: RSA, with whom Quindell is already linked in the UK and Gore Mutual, a broker-based Canadian insurance. It will be delivered in partnership with Ingenie, the contract is based on an initial target of 30,000 telematics devices. Over five years, this should be achievable; IBAO’s membership base represents about 12,000 brokers. In turn, they provide approximately 53% of auto insurance policies in Ontario, representing more than six million policyholders.

More recently, Quindell also announced a deal with Canadian car club CAA, the main road assistance service company in Ontario with 1.9 million members. This perhaps follows the model of their partnership with RAC in the UK. Quindell will offer the same suite of services to CAA as it does to IBRI.

The second ripple came with Intact Insurance (the largest provider of P&C insurance in Canada) and belairdirect announcing they will launch a PHYD programme in Quebec, enabling good drivers to save a maximum of 25% on their premium with a 5% enrolment discount upon registration. While the primary goal of the programme, which is managed by Octo Telematics, is to attract good drivers, the ultimate objective is to reduce the number and the cost of claims by improving driver behaviour based on monitoring time of day and acceleration.

As recently stipulated by the Financial Services Commission of Ontario (FSCO), the premium from the Intact Insurance programme will only go down, and the data will not be used to cancel or refuse renewal of a policy or to confirm rating criteria currently used. Also, participants will be provided with information on how the data will be collected and how it is used.

The full FSCO announcement has far reaching requirements:

  • It redefines the legal status of the collected data as “personal information”
  • It requires advertising around UBI to be approved by FSCO
  • It requires the driver’s explicit opt-in for the data to be used by third party providers
  • It stipulates and restricts the use of telematics data for claims management, mentioning that “it would be inappropriate for insurers to use UBIP data for claims-related purposes at this time”

Looking at the current political climate and the relationship between the political establishment and the insurance regulators, we believe the bulletin is a great first step rather than an end point. The 2014 election will undoubtedly lift a number of pressure points on the insurance premium levels and the range of products available.

Lastly, the bulletin requested that insurers facilitate driver profile transferability between competing UBI programmes – a request echoed by the IBRI but typically shunned by insurance players who see portability as a way to commoditise telematics data.

That said, some progress is being made on the data standardisation issue. In January, the CSIO, an industry organisation for the Canadian insurers and brokers and a member of the ACORD working group, will release a standard communication protocol to make UBI data coming from the TSP easier to integrate at the insurance database level.

The aim is to facilitate and open up the competition between TSPs as it will require much less effort from insurance companies throughout North America to swap between them or use more than one TSP at a time. The standard is focusing on how the data is packaged, transmitted and made consistent.

“In time, data transportability will certainly happen,” says Blair, “but not before all parties involved are sitting together at the same table to define such a standard.”

More information about the Canadian UBI market can be found in the 2016 UBI Global Study as well as in its Market Model and forecast