Partnerre Ltd. · OTC:PREJF
Partnerre — PartnerRe Client Event Milan 2008
46 slides from Partnerre's conference presentation, Oct 7, 2008
Slide 1: Telematics
Telematics Developments in the Sector of MTPL and Future-Oriented Solutions Ruedi Gaehler, Senior Underwriter P&C 7th October 2008
Slide 2: Agenda
PartnerRe Client Event Milan 7th October 2008 2 Agenda About Telematics and its Definition Application and Parties Involved Technical Approach Functional Approach Risk Assessment and New Products Opportunities and Threats Outlook
Slide 3: Telematics
PartnerRe Client Event Milan 7th October 2008 3 Telematics Though all European motor insurance markets are different and have their own unique characteristics, one can identify some common features. Technological innovation occurs in all markets. The implementation of new products often brings t
Slide 4: Telematics
PartnerRe Client Event Milan 7th October 2008 4 Telematics PartnerRe seeks to be a forum for the exchange of information and know-how with and between clients of the different markets. Progress cannot and should not be avoided, but one can prepare oneself to be ready to meet the challenges it br
Slide 5: Definition of Telematics
PartnerRe Client Event Milan 7th October 2008 5 Definition of Telematics Telemetry + Informatics = Telematics The combination of radio communication and applied information technology led to the development of new innovative techniques in the field of the motor business. Pictures: www.tescon-systems
Slide 6: Agenda
PartnerRe Client Event Milan 7th October 2008 6 Agenda About Telematics and its Definition Application and Parties Involved Technical Approach Functional Approach Risk Assessment and New Products Opportunities and Threats Outlook
Slide 7: Application of an On Board Unit
PartnerRe Client Event Milan 7th October 2008 7 Application of an “On Board Unit” Safety at work Departure Times Driver Assistance Telephone Tracking Navigation Entertainment Speed Assistance Arrival Times eCall & Hands-Free Car Kit Rescue Insurance
Slide 8: Stakeholder – Parties Involved in Telematics
PartnerRe Client Event Milan 7th October 2008 8 Stakeholder – Parties Involved in Telematics Government (in a later stage) Insurance Industry Car Producer Assistance & Rescue Consumer Services Telematics Product Suppliers Software Telecommunication Producer Provider
Slide 9: Agenda
PartnerRe Client Event Milan 7th October 2008 9 Agenda About Telematics and its Definition Application and Parties Involved Technical Approach Functional Approach Risk Assessment and New Products Opportunities and Threats Outlook
Slide 10: Technical Approach
PartnerRe Client Event Milan 7th October 2008 10 Technical Approach In order to offer a motor insurance product taking into consideration the individual insureds needs, their driving habits are assessed by “On Board Units” supported by GPS and electronic maps. Pictures: farm4.static.flickr.com and w
Slide 11: Technical Approach
PartnerRe Client Event Milan 7th October 2008 11 Technical Approach The “On Board Unit” works as a computer and has its fix place in the vehicle. “On Board Unit” Picture: Saju T. Joseph and Uwe Krüger, Hewlett Packard
Slide 12: Technical Approach
PartnerRe Client Event Milan 7th October 2008 12 Technical Approach Usually “On Board Units” work in conjunction with navigation systems. Some of them can be purchased as an add-on to navigation systems. Navigation System Picture: logix-tt
Slide 13: Agenda
PartnerRe Client Event Milan 7th October 2008 13 Agenda About Telematics and its Definition Application and Parties Involved Technical Approach Functional Approach Risk Assessment and New Products Opportunities and Threats Outlook
Slide 14: Telematics – Process Flow
PartnerRe Client Event Milan 7th October 2008 14 Telematics – Process Flow Antenna for cell phones GPS-Satellite Server at the Telematics Center Internet GPRS Internet GPS OBU incl. Sim-Card Possible data recipients: Server of an - Insurance company - Assistance center Insured Car - Emergency center
Slide 15: Telematics
PartnerRe Client Event Milan 7th October 2008 15 Telematics As soon the vehicle‘s ignition is activated the “On Board Unit” collects every second the following data: Time Vehicle position (latitude and longitude) Driving direction Driving speed For economical reasons the data collected durin
Slide 16: Telematics
PartnerRe Client Event Milan 7th October 2008 16 Telematics What further information can be assessed? Speed ► When and where a vehicle exceeds the speed limit? Tracing and tracking ► Exact localization of a vehicle. Such information may be of great interest for the risk assessment, but also of suppo
Slide 17: Agenda
PartnerRe Client Event Milan 7th October 2008 17 Agenda About Telematics and its Definition Application and Parties Involved Technical Approach Functional Approach Risk Assessment and New Products Opportunities and Threats Outlook
Slide 18: Risk Assessment
PartnerRe Client Event Milan 7th October 2008 18 Risk Assessment More than age, type of car (engine) or domicile of the vehicle owner, the individual client’s driving habits have impact to the quality of risk. Most common causes of accident: Speeding Alcohol & drugs Overestimation of one‘s own
Slide 19: New Products
PartnerRe Client Event Milan 7th October 2008 19 New Products A new insurance product was developed in recent years, called “PAYD”. Pay As You Drive PAYD is a policy model for a usage-dependent risk rating of motor risks.
Slide 20: PAYD
PartnerRe Client Event Milan 7th October 2008 20 PAYD Various insurance companies have already launched PAYD-products or are currently developing such products: Progressive, USA („owner of the patent“) AXA, Ireland AXA, DBV Winterthur, Germany Lloyd Adriatico, Italy Norwich Union Insurance
Slide 21: Companies Developing PAYD-Products
PartnerRe Client Event Milan 7th October 2008 21 Companies Developing PAYD-Products Source: Covea Study (France) and Eurapco
Slide 22: New Products
PartnerRe Client Event Milan 7th October 2008 22 New Products Other motor insurance products work with „speed recorders“. There – different to PAYD-products – the data collected are only evaluated in case of accident. with „speed recorders“ and cameras in the vehicle filming the road (driver’s v
Slide 23: Agenda
PartnerRe Client Event Milan 7th October 2008 23 Agenda About Telematics and its Definition Application and Parties Involved Technical Approach Functional Approach Risk Assessment and New Products Opportunities and Threats Outlook
Slide 24: Opportunities and Threats
PartnerRe Client Event Milan 7th October 2008 24 Opportunities and Threats The introduction of a new product always contains risks and only the thorough consideration of the opportunities and the threats decide whether it shall be launched or not. The introduction risk of a telematics based insuranc
Slide 25: Opportunities
PartnerRe Client Event Milan 7th October 2008 25 Opportunities Improved risk assessment Increased ratio of customer retention Differentiation from competitors by innovative products More detailed and/or “justified” pricing of individual risks Enlarged claims handling
Slide 26: Risk Assessment
PartnerRe Client Event Milan 7th October 2008 26 Risk Assessment Risk consideration based on the drivers’ driving habits improves the risk selection Change of driving habits are recognized within short time (almost immediately) Avoidance of so called “bad risks”, i.e. driving at high speed (racing
Slide 27: Increased Customer Retention
PartnerRe Client Event Milan 7th October 2008 27 Increased Customer Retention PAYD-Policies insurance products lead to an increased client retention ratio. Discount rates offered by the insurer to so called “good clients” Gadgets attached to the “On Board Unit” device Investments done by the c
Slide 28: Differentiation
PartnerRe Client Event Milan 7th October 2008 28 Differentiation Such PAYD-product cannot be copied as easy as other product innovations (first-mover-advantage) Possibility for product and price differentiation New client segments can be defined and targeted Offer of electronic gadgets as a
Slide 29: Risk Pricing
PartnerRe Client Event Milan 7th October 2008 29 Risk Pricing Personal and usage-dependent motor risk pricing becomes possible. New rating criteria can (have to) be created and applied to the risk pricing. Clients pay only as they drive, e.g. for the mileage, and, therefore, the premium is to
Slide 30: Claims Management
PartnerRe Client Event Milan 7th October 2008 30 Claims Management For the investigation of accidents and the trace of stolen vehicles the data collected by the “On Board Unit” may be of help. Data collected such as time, speed, airbag deployment and impact sensor information Trace and trackin
Slide 31: Threats
PartnerRe Client Event Milan 7th October 2008 31 Threats Costs Handling of the amount of data Data Protection Act Actuarial risk Technical obstacles
Slide 32: Costs
PartnerRe Client Event Milan 7th October 2008 32 Costs The cost of the “On Board Unit” is – usually – paid by the vehicle owners. An example: EUR 100 Navigation system EUR 75 “On Board Unit” as an add on . EUR 175 Total costs for technical features EUR 50 Estimated installation costs . EUR 225 Total
Slide 33: Costs
PartnerRe Client Event Milan 7th October 2008 33 Costs The costs of the technical features are still on the high side. ► Currently the costs are high and the capacity of deliverable features (hardware) is limited. ► Currently suitable for niche markets, rather than for the mass business. Costs devel
Slide 34: Costs
PartnerRe Client Event Milan 7th October 2008 34 Costs Car producer are expected to assemble new cars with “black box” devices as from the next decade. ► eSafety Project of the European Commission
Slide 35: Handling the Amount of Data
PartnerRe Client Event Milan 7th October 2008 35 Handling the Amount of Data Assuming that the information collected per car amounts to 16 bites per second cars are driven on average four hours a day the number of policies written amounts to 5’000 an insurer would be faced with a large amount
Slide 36: Data Protection Act
PartnerRe Client Event Milan 7th October 2008 36 Data Protection Act Depending on the legislation of the different countries the Data Protection Act may be an issue. Client agreement Principle of “economy of data” Data protection (cryptography and confidentiality) Observation of clients rath
Slide 37: Actuarial Risk
PartnerRe Client Event Milan 7th October 2008 37 Actuarial Risk Actuarial miss-estimations and bad predictions in comparison with the reality The loss ratio does not diminish as expected Business targets may not be achieved (e.g. estimated number of policies written)
Slide 38: Technical Obstacles
PartnerRe Client Event Milan 7th October 2008 38 Technical Obstacles For the time being no standards are set for the “On Board Units”. Pictures: www.nentec.com, www.softronica.org and cache.jalopnik.com
Slide 39: Agenda
PartnerRe Client Event Milan 7th October 2008 39 Agenda About Telematics and its Definition Application and Parties Involved Technical Approach Functional Approach Risk Assessment and New Products Opportunities and Threats Outlook
Slide 40: Outlook
PartnerRe Client Event Milan 7th October 2008 40 Outlook Within the scope of the eSafety Project, the European Commission expects car manufacturer to assemble new cars with the eCall system as from September 2010. eCall is intended to bring rapid assistance to motorists involved in collisions anywhe
Slide 41: Outlook
PartnerRe Client Event Milan 7th October 2008 41 Outlook The technology is available! Who will be able to use is? Pictures: Petra Wildemann, Hewlett Packard
Slide 42: Il Futuro è già Cominciato
PartnerRe Client Event Milan 7th October 2008 42 Il Futuro è già Cominciato Niente al mondo è forte come un‘idea per la quale sia giunto il momento giusto! Nothing is more powerful than an idea whose time has come! Victor Hugo
Slide 43: Il Futuro è già Cominciato
PartnerRe Client Event Milan 7th October 2008 43 Il Futuro è già Cominciato L'unico limite alle nostre realizzazioni di domani sono i dubbi di oggi! The only limit to our realization of tomorrow will be our doubts of today! Franklin D. Roosevelt
Slide 44: Thank you for your attention!
PartnerRe Client Event Milan 7th October 2008 44 Telematics Thank you for your attention!
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