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The quest for telematics 4.0: Dialogue with the value chain – EY

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Article Synopsis :

Telematics 4.0 — the seamless integration of mobility and the web — presents insurers with an unprecedented range of opportunities (and threats).

 The Digital Insurer reviews EY’s Report on The quest for telematics 4.0: Dialogue with the value chain

Car and driver become one in the same in the digital world 

EY’s Global Automotive and Telecom teams recently brought together more than 30 senior decision-makers from original equipment manufacturers (OEMs), suppliers, telcos and telematics companies, for a roundtable discussion. The report “The quest for telematics 4.0: Dialogue with the value chain”, is a summary of this discussion.

The roundtable was broadly focused on two key areas:

1.     Making sense to customers

  • Dealing with complexities in defining the value proposition (hardware, services, connectivity)
  • Effective pricing and service packaging, including customer segmentation

2.     Driving enterprise value

  • Identifying the sources of return on investment for OEMs, suppliers, telcos, dealers, insurance companies and telematics operators
  • Recognizing the need for enterprise-wide dialogue on performance management, metrics, ROI, internal operations and business models

Five high-level findings are as follows:

Ecosystem consolidation — The ecosystem is likely to consolidate, leaving larger players well positioned. Players need to consider their core competencies and develop stronger partner management skills to ensure a well-delivered end-to-end portfolio. Tier 1 automotive players are likely to be the most impacted as telcos and automakers seek to vertically integrate.

Revenue model — A mixture of subscription, embedded, pay as you go (PAYG) and big data will need to be considered for successful mass market offerings. Product-category-based pricing makes the most sense, with security features being embedded, infotainment being on a PAYG basis and data analytics being used to sell driver data to third parties. Subscription of any kind will need to be integrated with existing plans before customers will accept what? the terms? the conditions?

Data as the key currency — Dealers, insurance companies and retail stores would all be interested in utilizing data generated from telematics to refine their own business propositions. The ecosystem needs to resolve issues of data portability and ownership (including privacy), as well as system investment, to create sustainable offerings.

Telecom operators — First mover advantage will be critical to differentiation. Operators have to develop a wider set of telematics services other than simply connectivity. Services related to bill integration and invoicing, service provisioning, device management, data analytics and customer support are all competencies that could be leveraged to deliver telematics service.

Automakers — The form-factor issues will need to remain flexible and cater to economic customer segments. In the short term, a hybrid solution of embedded for premium vehicles and tethered for non-premium vehicles may make sense. Delivering this flexibility to an increasingly sophisticated customer base will be difficult, and partnering for the right competencies will be vital. Key to successful partnerships for automakers will be their ability to increasingly operate as a service-oriented enterprise.

Human-machine interface (HMI) is an area where OEM’s are keen to place their bets as they drive toward delivery of integrated UBI services and solutions. The report dives into the detail of telematics and serves as an excellent primer for executives new to the subject.

Link to Full Article:: click here

Digital Insurer's Comments

This paper isn’t about telematics in insurance per se, which is precisely why insurance executives should read it. As cars roll off global assembly lines equipped with native connectivity digitally-minded executives in other industries are thinking ambitiously about how to monetize it.

For tactical reasons, insurers need to understand the emerging telematics and autonomous vehicle ecosystem in order to reliably estimate its impact on existing product offerings and claims functions.

Strategically, opportunities for insurance telematics innovation aren’t necessarily limited to insurers. Automakers in particular, realizing insurance is a major component of their product’s total cost of ownership (TCO), will either directly or via partnership, enter the UBI space within three-to-five years. The telecoms will be active as well, but for different reasons.

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