• Telematics insurance is driving a transformation in all aspects of the auto-insurance industry.
• Risk pools and actuarial tables are giving way to real data on real drivers in the real world.
• With IoT, might your mortgage company become a lifestyle concierge?

When Groupama Assicurazioni began deploying smart sensors into customers’ cars and trucks four years ago, the primary purpose was cutting down on theft and fraud by knowing where vehicles were at all times.

If policyholders opted into this IoT system—known in the industry as telematics insurance—they could receive annual premium discounts of 15 percent to 25 percent.

At the same time, Groupama discovered that knowing a vehicle’s location, speed and acceleration could reveal crashes in real time. If one appeared serious enough (50 or higher on a 100-point impact scale), dispatchers would contact the customer. If no one answered, emergency services were immediately sent.

Learn how data can transform the policyholder experience

On approximately 200 occasions a month, first responders are deployed, according to Groupama, arriving faster than they otherwise might have. This has helped prevent some injuries from becoming serious or even fatal.

Saving lives was only the beginning of the surprises from the telematics program, which Groupama Assicurazioni (the Italian affiliate of Paris-based Groupama Group) has branded as G-Evolution. The service has also helped customers navigate safer, more direct routes, reduce reckless driving, protect their vehicles from criminals and even keep an eye on their families.

“Usually, when customers are reaching out to insurers, it’s because something unfortunate has happened,” Emanuele Scarnera, head of finance and business development at G-Evolution, told Industrious. “Now, we can ease their trouble, or even prevent it.”

Yet the most unexpected surprise may be how many policyholders in privacy-sensitive Italy signed up for the service: more than a third have opted in since the 2015 launch.

Some of this early adoption is attributable to the unique challenges of car ownership in Italy, particularly Il Mezzogiorno, the southern half of the peninsula from Abruzzo down through Sicily, where organized crime persists.

According to Scarnera, premiums in the Mezzogiorno are twice as high as those in the north, due to the higher number of thefts and fraudulent claims. And because the south is more economically depressed, with salaries 60 percent below the north, it creates an actuarial paradox: when people can’t afford insurance, fraud and crime are more likely. That only further drives up insurance rates, leading to more crime, and so on.

The precise location of a vehicle helps with theft, but the moment-by-moment GPS detection underlying telematics insurance can also reveal even the most subtle frauds. For example, G-Evolution can tell if a customer who had a legitimate accident, maybe a head-on collision, then tries lump in previous damage, say to the rear bumper. Telematics data of the vehicle’s precise movements at the time of the crash and in the past are fed into an algorithm and then combined with traditional inspection tools to help validate claims.

Pedro Bernardo Santos, the managing director of G-Evolution, believes telematics will overhaul the underwriting business. The historic work of risk protection and management will wane. “Thanks to new technology,” Santos said, “risk prediction and risk prevention will be a big and growing market for insurers.”

As Praveen Velichety, a digital and cognitive consulting lead at IBM Global Business Services who worked on G-Evolution, put it: “Gone are the days of traditional actuarial tables. Now we can rely on dynamic data for a dynamic world.”

The offerings have grown alongside the growth in data. Groupama can now help customers navigate their routes based on weather patterns or road closures, and there is even a hope this could prevent crashes at some point. If G-Evolution’s algorithm knows a certain driver likes to speed through a particularly crash-prone section of the A51 outside Milan, which is especially treacherous in the rain, Scarnera said the system could encourage the driver to slow down or even take a different route.

G-Evolution has also attracted some unlikely power users: nosy, IoT-enabled parents. “We find they’re more relaxed and reassured, knowing their teenage children are where they say they are,” Scarnera said.

Such services would not be possible without strong data. This led Groupama to move its telematics operation in-house in April 2017 with assistance from GBS and a Watson IoT team in Rome.

“All the tools, all the data, all the mechanisms are now there to build cutting-edge services, whether preventing accidents, automating claims or nicer commutes,” Tiziana Tornaghi, an IBM cloud application innovation leader in Milan.

The social benefits extend to greater society, as well.

G-Evolution is collecting data on potholes and other infrastructure problems, which Groupama plans to share with local governments. Such repairs both improve rides and prevent damage to vehicles.

And because good driving behavior is rewarded by lower rates, G-Evolution has demonstrated an impact on aggressive driving, with speeding and dangerous braking significantly reduced: according to Groupama data, at least 800 crashes have been avoided a year among G-Evolution drivers.

Thanks to the myriad features of telematics insurance, Groupama is on track to reduce claim expenses around 10 percent to 15 percent annually.

“We’ve changed the whole paradigm,” Simone Nardocci, G-Evolution’s chief technology officer, said. “Before, there was a lot of back-and-forth with customers. Now, we can get to yes or no much more quickly, thus speeding up claim settlements.”

The next evolution of G-Evolution should be even more dramatic, creating a platform that’s as much lifestyle concierge as driving assistant.  And Groupama, because it has no interest in monetizing driver data beyond its closed platform, believes it can engender greater trust with consumers.

“We’re crystal clear what we do with the data,” Nardocci said. “We never share it with third parties that may use it for marketing or sales and keep it protected at all times.”

Imagine a connected car that is wired into your smart home and can tell not just if the oven is on or the washer is overflowing but can turn them off. The car then mentions a cappuccino sale—your favorite drink—at a coffee shop along an unfamiliar route. It could even help with proactive maintenance.

“Insurers are already helping us deal with the usual insurance risks in our lives,” Velichety said. “That’s earned them a lot of trust, so who better to help with our everyday needs, too?”