China Vehicle Insurance Outlook

Transcription

1 China Vehicle Insurance Outlook Beijing, China How the Coming Evolutionary and Disruptive Changes Will Affect Auto Insurance: Lessons for the Chinese Market SCOTT J. MCCORMICK, PRESIDENT CONNECTED VEHICLE TRADE ASSOCIATION

2 Abstract With the convergence of Transportation, Energy, Information, Communication and Data sectors, there are a number of both opportunities and issues for Policy Makers, Business Relationships and infrastructure management. Policy, and regulation needs are being examined for data privacy and ownership, spectrum use, security and liability. The "Internet of cars" will also create new business models: from building and servicing cars, providing cloud-based infotainment and location-based services, to crash prevention and intelligent traffic management. The explosive growth of data offers tremendous opportunities to extract new knowledge and new opportunities. The build out of Smart Cities, Smart Grid, Smart Vehicles, Cloud Storage and Processing, Data Harvesting and Analytics and Dynamic Transportation and Infrastructure Management with fundamentally change the definition of End-to-End Connectivity and bring about evolutionary changes in our lives. 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 2

3 What are the Domains we will look at Smart, connected vehicles Smart Grid Smart Cities Cloud Storage and Processing Data Harvesting and Analytics Dynamic Transportation and Infrastructure Management Policy and Regulation Implications 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 3

4 Smart, Connected Vehicles Having connectivity, whether for Cellular Communication, WiFi Infotainment or Safety (DSRC) is a stepping stone. Increased electronic safety and control systems, by themselves are reactionary, and also a necessary step. Creating smart, connected vehicles allows vehicle and driver road, weather and traffic information beyond the immediate location, and possibly across the entire rout and its alternatives. Acting as probes, aggregated data will allow public sectors to evolve to more sophisticated, timely and efficient operations. In addition, combining this data with other databases and analytical tools will spawn whole new businesses in many sectors 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 4

5 Technology and data A single car produces an exabyte of data (a billion gigabytes) per year. Isolating useful data to extract knowledge from is a monumental task. Event triggered data management is also a major concern for OEMs. Trend and cycle assessment of road and traffic conditions, vehicle performance, etc. from timeframes of minutes to years is needed. The next step is to mesh the above data to other knowledge bases in a combinatorial study to refine out purchasing relationships, maintenance needs, collateral sales opportunities. 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 5

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8 What kind of data is collected? A typical passenger vehicle in the US will generate over an exabyte of data in a year that is 1 billion gigabytes Insurance Telematics programs use from 6 to 28 types of data out of the thousands generated by the car.

9 Standards and globalization Standards are developed to take the non-differentiating elements out of a company s need for internal expertise. Insurance Telematics has not only automotive and insurance standards, but communication, computation and networking standards to address. A comprehensive gap analysis is needed to understand what is really missing and needed. Until we know where we are going and what the non-differentiating elements are, its is premature to work on them. Open Source initiatives have begun to show some promising results. It is a lot simpler to reach common agreement globally than with the states! 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 9

10 Insurance Telematics Program Value Ability to better manage fraud Improves claims handling Improved risk measurement and pricing accuracy Highly effective behavioral change models possible Knowledge to empower new risk engineering models Proactive data supporting improved business models Changes the overall value proposition with the insurer Indication that driving behavior may correlate with other non-auto risks Appeals to consumers as it is intuitive, controllable, and minimizes reliance on controversial proxies Attracts lower risk insurees via self-selection Allows customers to understand and eliminate risky behaviors, actually reducing accident frequency Differentiates product offering by offering additional services 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 10

11 Business Models Insurance Telematics primarily is used to collect data for a period of time to allow insurer to assess the risk metrics of the driver. However, sampling data over longer periods, rather than continuous monitoring, has value. Vehicle telematics for an automaker is driven around providing data for diagnostics, routing & LBS, and other infotainment functions. Commercial fleets desire ongoing insurance telematics information for continual driver behavior monitoring, situational awareness and safety. 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 11

12 Evolving business models 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 12

13 Telematics Value Pyramid from Insurer Perspective Business Optimization Management Information and Decision Support Analytics Knowledge Creation Value to Insurer System Infrastructure Data Management and Localization Telematics Services Devices or Sensors Typical focal point Graphic per Towers Watson 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 13

14 Smart Grid A smart grid is a modernized electrical grid that uses analog or digital information and communications technology to gather and act on information, such as information about the behaviors of suppliers and consumers, in an automated fashion to improve the efficiency, reliability, economics, and sustainability of the production and distribution of electricity. Electronic power conditioning and control of the production and distribution of electricity are important aspects of the smart grid. Roll-out of smart grid technology also implies a fundamental re-engineering of the electricity services industry. 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 14

15 Smart Cities A smart city uses digital technologies to enhance performance and wellbeing, to reduce costs and resource consumption, and to engage more effectively and actively with its citizens. Key 'smart' sectors include transport, energy, health care, water and waste. A smart city should be able to respond faster to city and global challenges than one with a simple 'transactional' relationship with its citizens. By definition, Smart Cities would be part of the Smart Grid. 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 15

16 Cloud Storage and Processing Cloud computing metaphor: For a user, the network elements representing the provider-rendered services are invisible, as if obscured by a cloud. Cloud computing relies on sharing of resources to achieve coherence and economies of scale, similar to a utility (like the electricity grid) over a network. At the foundation of cloud computing is the broader concept of converged infrastructure and shared services. 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 16

17 Data Harvesting and Analytics Analysis of data is a process of inspecting, cleaning, transforming, and modeling data with the goal of discovering useful information, suggesting conclusions, and supporting decision-making. Data mining is a particular data analysis technique that focuses on modeling and knowledge discovery for predictive rather than purely descriptive purposes. With the advent of converged connectivity, it is now possible to harvest and process data with event stream processing techniques in near real time. And it s not that data is big just by volume, but can be by variety, velocity and value as well. 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 17

18 Dynamic Transportation and Infrastructure Management Dynamic Infrastructure is an information technology paradigm concerning the design of data centers so that the underlying hardware and software can respond dynamically to changing levels of demand in more fundamental and efficient ways than before. Applying this paradigm to transportation and infrastructure management, along with all of the knowledge from the Smart Vehicles/Cities/Grid/Cloud/Data will allow for substantive efficiency, control and predictive actions not possible now. However, the public sector is very poorly equipped, trained or conversant in these areas to even marginally advantage themselves of this potential opportunity. 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 18

19 Policy and Regulation Implications Privacy the US has no comprehensive digital data policy or law. We have 24 regulations, all industry specific, and all non mandatory Data Ownership OEM publicly say they are stewards of the owners data, but they are actively working internally to determine how to monetize the data. Public entities have a similar problem, but only use it when anonymized and aggregated Security In-vehicle electronic safety systems are being hardened now, DSRC communicated safety messages are encrypted, but Cellular and WiFi are the most vulnerable. Liability Existing laws are adequate for a connected vehicle, but not for automation, and certainly not for the convergence underway. 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 19

20 Business Opportunities What are the competitive requisites? Knowledge for situational awareness, improve productivity, improve decision making and speed implementation Agility and adaptability the ability to opportunistically change, evolve, and compete effectively Advantageous use of emerging technologies, hard and soft Is your ecosystem malleable and evolvable? Can regional, technological, financial, business and product/service models effectively and efficiently incorporate new relationships or eliminate legacy ones of fading value. Are you training and growing your personnel to be better at what they do now, or to be better able to accomplish your future needs? 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 20

21 Possibilities Actuarial Science + Engineering Analysis = Knowledge allowing OEMs to mitigate Liability Analytics + Data Management = Trend and cycle assessments of vehicle performance, traffic, infrastructure conditions, etc. Technology + Transportation Agency (Federal, State, Local) = Ability to understand the real time flow of traffic, road conditions, and over time driver behavior at a crowd level, by time/day/season/event/etc. Claims Adjudication and Customer Service + Content aggregator and distribution = CRM function for OEMs developing the vehicle Platform as a Service (PaaS). Marketing + Mobile Strategy = Ability to harvest, analyze and distribute both micro and macro information B2C, B2B, B2G and B2P 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 21

22 The Future is in Collaboration We aren t going to be doing more of the kind of business we do now, or more business with the same customers. Our businesses and lifestyles are evolving accidentally, circumstantially, intentionally and prohibitively (terrorism, resource depletion, economic factors, etc.). New businesses will largely be created by combining existing capabilities to service new needs. Advancing efficiency and effectivity while reducing cost must underpin any new venture. But only doing the previous bullet only provides diminishing incremental improvements. 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 22

23 Scott McCormick President Connected Vehicle Trade Association Scott has degrees in Mechanical and Aerospace Engineering, a Master s in Business Administration, and Post Graduate Research in Artificial Intelligence. Prior to CVTA, Scott was the first President of the VII Consortium and before that the Executive Director of the AMI-C, a nonprofit research organization of the world s largest automakers. Scott is a former Advisor to the US National Science Foundation and the Industry Representative the US Federal Laboratories Technology Transfer Consortium. He is the former Strategic Advisor to the United Nation s International Telecommunications Union (ITU-T) Advisory Panel on Communication Standards to Vehicles In 2012, and again 2014, Scott was appointed by the US Congress to the ITS Program Advisory Committee to advise the Secretary of Transportation and Congress on matters relating to the study, development, and implementation of Intelligent Transportation Systems. 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 23

24 Who We Are: Connected Vehicle Trade Association CVTA is an international, non-profit trade association formed to advance the interests of industries and organizations involved in vehicle communications. Membership is open to companies, universities, standards bodies and public agencies globally. The Board of Directors was established with one representative from each industry involved and includes Delphi, Magneti Marelli, Nokia, Cisco, Intel, Visteon, Verizon, Oracle and Road America, among others. 5/18/ CONNECTED VEHICLE TRADE ASSOCIATION 24