With the evolution of the UBI landscape, how to select the right partner?

Usage-Based Insurance (UBI) is no longer a niche.

It has become the fastest growing segment of the motor insurance market with 60 million policyholders in 62 countries.

Over the past two decades, the landscape of suppliers offering telematics solutions to insurance companies has undergone a profound transformation driven by smartphonisation, scale effects, vehicle connectivity, data regulations, and a significant decrease in unit prices.

Today, insurers must navigate an increasingly complex supply environment. We identified no less than 32 credible vendors for carriers to choose from.

Based on our experience, the supply has clearly gained in both scale and professionalism. To the point that while there are still insurers doing it all by themselves, it has become increasingly challenging to do so. We outline below what has changed, which Telematics Service Providers (TSPs) insurers should consider, and key guidelines for selecting the right long term partner.

1. What has changed in the insurance TSP competitive landscape

From hardware-centric to data-centric architectures

In the early years of connected auto insurance – when Progressive, Norwich Union and Unipol were selecting their first solution provider – the competitive battlefield revolved around hardware: black boxes, dongles and installation capabilities. Market leaders differentiated themselves through innovation, price, logistics scale and device compatibility and reliability.

Today, the centre of gravity has shifted decisively toward data ingestion and intelligence. Vendors compete on their ability to collect, enrich, normalise and interpret data — whether from OBD dongles, smartphone apps, OEM APIs or fleet telematics systems.

Consolidation and specialisation

The last few years saw many M&A transactions in the supply, driven by:

• Market share acquisition:
  • Cambridge Mobile Telematics (CMT) acquiring True Motion and its prized customers, notably Progressive Insurance
  • Trak Global acquiring IMS and adopting its brand
• Geographic expansion:
  • CMT acquiring Amodo in Central and South Eastern Europe
• Needs for complementary expertise:
  • Octo Telematics acquiring WillisTowersWatson’s DriveAbility business to build up its predictive analytics capabilities
  • CCC purchasing DriveFactor
  • FairConnect acquiring DriveQuant
• The willingness to expand from an increasingly saturated fleet telematics market:
  • Targa Telematics acquiring Viasat
  • Radius, the fleet specialist, buying Modus Telematics

For insurance carriers, this has resulted in a narrower set of end-to-end insurance TSP specialists but also a larger number of diversified providers, many of them coming from the fleet management services (FMS) or data analytics markets.

The rise of eFNOL and claims automation as core value drivers

Crash detection, loss estimation, and claims triage have become as important as risk scoring.

Insurers increasingly demand end-to-end capabilities covering underwriting, pricing, user engagement but also loss reduction enablement.

A decisive breakthrough in that regard is the advent of smartphone-centric (a mobile app combined with a Bluetooth-enabled beacon) or even smartphone-triggered crash detection, which are now being rolled out across the US market.

Suppliers who can shorten the claims cycle or detect fraud now enjoy a decisive competitive advantage.

OEM-driven disruption?

As cars all become connected platforms, vehicle manufacturers have been willing to play a role. OEM data monetisation entities such as Stellantis’ Mobilisights, or Renault’s Mobilize now compete directly with traditional TSPs for the provision of telematics data.

This could push some insurers to reassess whether they need TSPs at all, or whether hybrid models mixing OEM feeds with mobile apps offer the best balance of performance and cost.

2. Which suppliers should insurers consider today?

Depending on their level of telematics experience, insurance companies will go for integrated solution providers or prefer to outsource specific components of the solution such as scoring.

Multi-device UBI solution providers

These vendors, for example IMS or Octo Telematics, offer end-to-end capabilities from data collection to scoring, engagement and claims support across multiple devices. They are the most appropriate for insurers seeking a single integration, fast go-to-market, and broad functionalities.

Smartphone UBI specialists

These suppliers, e.g. The Floow or CMT, deliver low-cost, rapid-deployment UBI solutions based on mobile sensors and app SDKs. The field of competition has grown with new players emerging such as Dolphin, DriveQuant and Sentiance. They excel in markets where cost sensitivity and scale matter. They are particularly appropriate for PHYD or RHYD programmes for personal lines, especially in competitive markets.

Connected vehicle data platforms  

Car makers now offer connected vehicle data with minimal latency and no hardware deployment. And API suppliers such as SmartCar or Caruso provide unified access across multiple manufacturers.

Contrarily to expectations, embedded telematics data is not really about high quality or low cost but more about offering a simple experience across a large portfolio of customers.

Car makers themselves, for example Toyota, GM, and more recently Tesla and BYD are using vehicle data to underwrite their own policies (or those of close partners, such as Aioi Nissay Dowa for Toyota). These suppliers are well positioned for new-car policies, affinity programmes with OEMs, and multi-country underwriters seeking scalability.

Fleet telematics suppliers

For commercial lines, fleet telematics systems are the obvious go-to destination to collect data easily and cheaply. Key TSPs that are positioning for insurance include Geotab and Targa Telematics. Having spotted this opportunity, data players such as Samba Safety or Draivn have started aggregating data from many fleet TSPs, from Samsara to VisionTrack.

In parallel, AI-based video recording and analysis has become the new gold standard for safety, liability assessment and claims reduction. Key vendors in the domain include Lytx and Nauto. Their domain of relevance will be fleets, and particularly those with high risk levels.  Read the interview of Stefan Heck, Nauto’s CEO, in the free abstract of our study here.

Analytics specialists

Finally, for insurance companies and brokers that already have dynamic data but wish to create their own algorithm, the key will be to score it and price the associated risks accordingly. Another use case is when carriers have data from multiple sources and need a single score across their portfolio. Companies such as Greater Than are covering this demand.

3. What is our take on selecting the best long term UBI partner?

While we detail all of the guiding principles to select the best partner in the UBI Global Study, we recommend a few of them below:

a. Test their flexibility and multi-data-sourcing capability

A future-proof partner should support smartphones, aftermarket devices, OEM APIs, and emerging vehicle-sensor data. The market is moving toward hybrid architectures, and insurers must avoid supplier lock-in.

b. Look beyond underwriting and focus on loss reduction

Telematics is now a risk reduction tool as much as a pricing tool. Choose partners who can demonstrably reduce claims costs, accelerate processing and support eFNOL.

c. Demand transparency and auditability of scoring models

Regulatory scrutiny of risk scoring is increasing. Long-term partners must provide clear, interpretable models and auditable logic that withstands actuarial and regulatory review.

d. Evaluate their ability to meet service KPIs

These include technical measures such as high resilience of the platform but also other features such as privacy management, data hosting in trusted countries and core systems integration capabilities.

e. Assess their product roadmap alignment and financial stability

Their innovation track record will be a key metric here. Their financial resilience will also be important to make sure the insurer and supplier roadmaps can be aligned for the long term. Last, their commitment to the insurance market will be an important factor.

f. Have the long view on price and business models

Of course price is gravity. But the business model will also be critical to ensure that the interests are well aligned for the long run.

Our conclusion: Telematics has become a critical IT function, do it well!

All in all, for most insurers, choosing the right telematics supplier has now become both a strategic imperative and a long term investment commitment, thus making it a critical decision. Thus, they will need to make sure that their telematics sourcing plans fit with their corporate strategy.

Obviously, insurance companies should beware of micro-managing their suppliers as these often have far more experience in telematics than themselves. However, to win a strategic ally, insurance carriers will want more than just a hardware or a software vendor. They will need to stress-test their capabilities before partnering for the long term. Trust must be won.

To help insurers navigate this complexity, PTOLEMUS just published the UBI Global Study, including a 270-page deep dive into the insurance telematics technology & supplier landscape and our associated UBI Supplier Ranking.

As a consulting firm, we are also used to advise carriers and brokers both in the initial stages of their telematics development but also when they are looking to reassess their strategy and sourcing.

To obtain more information, just contact Frederic Bruneteau.

Article written by Frederic Bruneteau, under PTOLEMUS copyright