Research of the Usage Based Insurance Market

October 2015

Analytical Report (full version)

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Analytical Report (full version)

Research of the Usage Based Insurance Market
Research of the Usage Based Insurance Market
October 2015

Research of the Usage Based Insurance Market

October 2015

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J'son & Partners Consulting presents brief results of the Usage Based Insurance market in Russia (UBI or "smart" insurance) in the first half of 2015.



Key issues of the study

  • Analysis of the trends, drivers and barriers of the Russian auto market of UBI.
  • Estimation of the volume and structure of the market.



Practical value of the research


The study identifies the key market trends and presents the volume indices for the market prospects assessment, particularly in the context of different segments.



Target audience


The study is designed to insurance companies, telecommunication operators, manufacturers of telematic equipment, venture capital funds, as well as specialized start-ups and research agencies.



Summary of the study


So called smart insurance is a type of insurance, where the calculations of insurance fee and insurance compensation are done with M2M – the insurance object is connected to a special device that collects data about the location, as well as about various characteristics of the object, which are important for the determination of insurance cases and carrying out all necessary calculations.


Beneficial use of this type of insurance is most common in the segment of vehicle insurance, but may also be applied in personal and cargo insurance.


The most developed segment in this area in Russia today is vehicle insurance, where special telematic devices, installed in the vehicles, register and may transfer (i.a. in real time) data about the condition of the car and driving style of the driver, so it is possible to reduce the risks due to the larger dataset on the basis of which it is easier to make decisions on insurance cases and payments.


Implementation of Usage Based Insurance (here and after UBI) can have a significant impact on the insurance sector in whole. First of all it is about increasing the customer base for insurance policies Casco. To date, not more than 40-45% of the cars leave their dealers being insured the Casco insurance policy, about other 15% are the cars whose owners prefer to be insured through different agency networks. As a result, the unreached customer base of Casco in 2015 amounted to about 40%, i.e. about 1 million vehicles (at the beginning of 2015 compared to January 1, 2014, the vehicle fleet in Russia increased by 6.3% or by 2 340 531 cars).


Comprehensive insurance (Casco) with telematic devices in the Russian insurance market today is offered by the following companies: AlfaStrakhovanie, "Ingosstrakh", "InTouch", "It is important. Brand new insurance" "URALSIB insurance" and "Liberty insurance".



The main drivers of the smart insurance market growth are:

  • the interest of insurance companies in reducing the level of accidents on the roads (the presence of telematics equipment is a serious deterrent to aggressive driving);
  • the possibility to lower the size of insurance premiums for the customers;
  • the availability of some extra services like anti-theft alarm, E-Call, B-Call, etc.;
  • the general global trend towards increasing the number of embedded telematics solutions in motor insurance.


According to J'son & Partners Consulting, the market expects a rapid growth. So, the total volume of the Russian Usage Based Insurance auto market by the end of 2015 will amount to not more than 30 000 issued "smart" policies, but by 2020 – about 3.3 million of actual smart policies; the penetration of smart auto insurance will reach 52%.



The industry representatives’ views


Valeria Skorohodova,

“Important. Brand new insurance”, CEO


How do you assess the current state and prospects of the UBI or "smart" auto insurance market?


Despite the development of this segment abroad, the market of insurance telematics in Russia is at its nascent stage. The "smart" insurance today is provided by only few insurance companies. In December 2014 the international conference "Smart insurance" experts forecasted that by 2020 the services of telematics in Russia will be in use of about 3-5 million car owners.


The demand for "smart" insurance is growing, and this is not only due to the constant growth of tariffs for Casco, which has gone up because of the macroeconomic situation in the country. Many car owners appreciate the possibility of solving lots of insurance-related problems via their mobile and the freedom from any bureaucracy while collecting the documents as well as the possibility of prolongation of the contract with discounts which motivates the driver to drive moderately. In addition, mobile app is a kind of counselor, which in time reminds you how to improve your driving style and earn more points.


What benefits can a client get purchasing a "smart" Casco insurance policy?


Now you can already see that telematics has advantages for the insured, because it significantly reduces the cost of insurance policies and for the insurance company as well, because we can see some decrease in fraud, it also simplifies the procedure for insurance adjustment (in most cases there is no need to provide any certificates from competent authorities).


The basis of the product "Casco – insurance telematics" is several components. The first is the settlement without a lot of information. Using the telematics device reports, we can reconstruct the accident. In this case, the insured doesn’t need to wait for the police and gather documents – it is enough to photograph the damage and complete the application about the insurance case. And then thanks to the online adjustment through a personal account on the insurer’s website the client can declare the loss.


The second component is the individual coverage variant. We initially provide a discount of up to 10% if you install our telematics. Also, the client can select one restriction: territory, mileage, time of vehicle operation and speed. Each constraint reduces the cost of the policy – you can see this on the website when booking: when you choose any of the restrictions, the cost of the policy also goes down in the calculator. If you choose a certain set of constraints, it is possible to reduce the cost of the policy by 50%.


The third component is the prolongation of the insurance contract. The client, who uses the mobile app "Important. Telematics", sees how to earn points for each trip in real-time. According to those points we offer a discount on a contract renewal for the following year.


Anton Ryumin,

«Liberty Insurance»,

director of the Department of motor underwriting


How do you assess the current state and prospects of the UBI or "smart" auto insurance market?


From February 2015, when we started our project on "smart" car insurance with the use of telematics devices, we have attracted to cooperation in the framework of the "Smart Casco" about 5% more clients of the total number of contracts.


Of course, in our work we look at the successful international experience, including the considered insurance market, where the share of sales of similar products is from 12% to 36 % depending on geography, companies and sales channels.


Currently, the program of insurance with telematics allows us not only to provide customers with a service that is becoming increasingly popular in the Russian market, but also to assess the possibilities offered by our telematics equipment in terms of risk selection and pricing for insurance. Now we can already note that the frequency of insurance cases in the segment with telematics is 56% lower in general.


What benefits can a client get purchasing a "smart" Casco insurance policy?


Casco with telematics works according to the slogan "pay as go". Being installed in the car free of charge, the equipment gives the ability to control and adjust your driving style and, as a result, reduce the cost of the Casco policy. In our company, Casco insurance with telematics (product called "Smart Casco" allows all the program participants to save on the cost of the policy up to 28%.


The objective "view from outside" is also important. It allows the client to assess their driving skills. The vast majority of car owners had the opportunity to evaluate the driving skills only during the training period before they got their driving license. Participation in the "Smart Casco" program allows you to get an unbiased evaluation, at least by a small number of objective indices. You can also compare your result with the average data, pay attention to the positive and negative aspects related to your driving.


Of course, telematics devices improve safety while driving: during the monitoring period most drivers try to drive carefully. Thanks to the mobile application, each participant receives daily reports on the main parameters and can track how certain actions affect the overall score, to assess the safety of their actions. On the basis of these data it is possible to adjust the style of your driving and improve the result, and thus receive a greater total discount. In addition, customers pay for the "Smart Casco" policy in two installments.


Sergey Demidov,

“Renaissance Insurance”,

managing director of the Department of motor vehicles insurance


How do you assess the current state and prospects of the UBI or "smart" auto insurance market?


Transport telematics in Russia is now actively developing. No one has doubt that in the nearest future the share of "smart" Casco policies can compete with traditional auto insurance policies. Many key market players have already launched or already are now in the process of launching products with telematics.


The main principle of formation of such offers is encouraging the drivers for their careful driving style. Consumers of insurance services tend to receive certain preferences for careful driving. This can be a discount when renewing the contract or when paying another premium, as well as the cancellation or reduction of the franchise size, which was originally included in the contract.


The expansion of the "smart" insurance market means more affordable and fair prices for comprehensive insurance for careful drivers, reduction of the risks of theft, risk reduction in general, as well as increase of traffic safety for the whole society.


At this stage of the market development we can speak about its significant potential growth, which is highly appreciated by both retail insurers and organizations. Careful driving provides drivers the opportunity to save on insurance, which is important during the crisis. In turn, car fleet owners will be able to receive data on the status and movement of each car, the driving style of each driver, which provides additional opportunities for business development.


We can not underestimate the potential of this market development through the use of telematics in the framework of the CTP Euro Protocol as well.


Maria Malkovskaya,




How do you assess the current state and prospects of the UBI or "smart" auto insurance market?


In Europe, USA and some other countries, this technology has been widely used for several years. The market of "smart" auto insurance in Russia is at an embryonic stage of development, it is still far from being common practice. According to our estimates, the market for such services can grow significantly over the next 4-5 years.


What benefits can a client get purchasing a "smart" Casco insurance policy?


When our clients install a special device in their car they can get cashback of up to 20% of the cost of the policy. After signing of the contract and purchase of the insurance policy the car is installed with a special equipment which measures various driving parameters (speed, sudden maneuvers, mileage, etc.). All information is transmitted to the server where it is analyzed and we can draw some conclusions on the driving habits of the customer. According to the results of the scoring process, the INTOUCH client gets points. Depending on the number of points it is possible to obtain partial reimbursement of the cost of the policy in a month after the equipment installation.


In addition, the device using the satellite system determines the location of the vehicle. It allows you not only to find your vehicle quickly if you have forgotten where it was parked, but also quickly get help and find out the circumstances in case of accident or identify the vehicle in case of theft.


But in addition to this "smart" insurance makes the driver more disciplined, as the manner of driving becomes clear. People change their driving style to get the benefit, and as a result they can save their life.


What other segments of the insurance industry in Russia can also use telematics, in you opinion?


If we talk about insurance, we can assume that it is primarily home insurance (telematics technologies are already actively used in smart homes), as well as life insurance and health and accident insurance (telematics can track the whereabouts of children, seniors, persons with disabilities). However, now it is rather a speculation. Active telematics is used more in logistics (transportation of goods, monitoring of public transport).



All the detailed results of the research are presented in the full version of the report:

«Research of the Usage Based Insurance Market»


  1. Summary of the study
  2. Terms and definitions
  3. Introduction
  4. Role of the telematics solutions in auto insurance

4.1. Existing technological solutions

4.2. Benefits of “smart” auto insurance

  1. Players of the “smart” insurance market

5.1. Insurance companies

5.2. Partners in installation of telematics equipment

5.3. Mobile operators

  1. Review of the foreign “smart” insurance markets
  2. Evaluation of the Russian “smart” insurance market, 2014-1st half of 2015, forecast up to 2020

7.1. The Russian Casco market

7.1.1. In natural terms

7.1.2. In monetary terms

7.1.3. Average premium

7.2. The Russian “smart” Casco market

7.2.1. In natural terms

7.2.2. In monetary terms

7.2.3. Average premium

7.2.4. Main players’ profiles

  1. Drivers and barriers for the development of the “smart” insurance in Russia
  2. Conclusions
  3.  Appendix. List of mentioned companies



List of figures

Fig. 1. Share of operating types of telematic devices in the world, 2015

Fig. 2. Active policies of "smart" insurance in Europe and North America, million policies, 2014-2019

Fig. 3. The market of "smart" auto insurance in Russia, 2014-2021.

Fig. 4. Examples of telematics devices

Fig. 5. Share of operated types of telematic devices in the world, 2015

Fig. 6. Basic benefits of "smart" insurance

Fig. 7. Active policies of "smart" insurance in Europe and North America, million policies, 2014-2019

Fig. 8. Share of active policies of "smart" insurance in Europe and the United States, %, 2010-2020

Fig. 9. Amount of data recorded by insurance companies using telematics, billion km, by market participants

Fig. 10. Telematics equipment Snapshot from Progressive Insurance

Fig. 11. System integrated solutions OnStar® and SYNC® from StateFarm

Fig. 12. InsureTheBox Portal

Fig. 13. InsureTheBox Portal

Fig. 14. Advantages of solutions on “smart” insurance from Verizon

Fig. 15. The scheme of interaction of Telefonica for implementation of M2M solutions, including solutions for “smart” insurance

Fig. 16. The Casco market in Russia in natural terms, million policies, 2012-2021

Fig. 17. The Casco market in Russia in natural terms by Federal districts, 2015.

Fig. 18. The Casco market in Russia in monetary terms, billion rubles, 2012-2021

Fig. 19. Forecast of trends of penetration of "smart" Casco auto insurance in the Russian market, %, 2015-2021.

Fig. 20. The market of "smart" Casco auto insurance in Russia in natural terms, thousand policies, 2012-2021

Fig. 21. The Casco market in Russia in natural terms with highlighting of Moscow and St. Petersburg, thousand policies, 2014 – 2020.

Fig. 23. The market of "smart" Casco auto insurance in Russia in monetary terms, billion rubles, 2012-2021

Fig. 22. The Casco market in Russia in monetary terms, with highlighting of Moscow and St. Petersburg, billion rubles, in 2014 – 2020..

Fig. 24. The average premium for “smart” Casco in Russia, RUB, 2012-2021


List of tab

Table 1. AlfaStrakhovanie

Table 2. "Important. Brand new insurance"

Table 3. "Ingosstrakh"

Table 4. "Liberty Insurance"

Table 5. "URALSIB Insurance"

Table 6. "Yuzhural-ASCO"

Table 7. Intouch

Table 8. 3S-Telematica

Table 9. VimpelCom

Table 10. MTS

Table 11. Raxel Telematics

Table 12. SpaceTeam

Table 13. T-one group



This information note is prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material.




J'son & Partners Consulting presents brief results of the Usage Based Insurance market in Russia (UBI or "smart" insurance) in the first half of 2015.