Connected automobile insurance: why is Italy a step ahead?

In Europe, Italy is way ahead of the field in connected automobile insurance, with 6.2 million policies taken out at the end of 2016, according to the IVASS – the Italian insurance monitoring institute. This corresponds to 20% of new policies or renewals.

Connected insurance policies represent over 40% of the automobile insurance portfolio of UnipolSai, the leader on the Italian general insurance market.

With solutions targeting driving behaviour taking over from the mileage-based offerings that were initially proposed, the Italian market is the most technologically advanced in Europe. How do we explain this?

• Italian consumers are the most willing of all European citizens to accept the idea of sharing their data, whereas French people remain reluctant.

• Insurance premiums for our transalpine neighbours are very high, if not the highest in Europe, and there are marked regional disparities, due to fraud and high levels of car theft and vandalism in particular. In 2015, they ranged from an average of €586 in Campania to €305 in the Aosta Valley.

• They are also very expensive for young drivers, varying by a ratio of one to four in relation to an experienced driver.

And the price happens to be the main selling point for connected insurance solutions. In this respect, the adjustment of premiums according to driving behaviour may lead to attractive reductions of up to 40%. These observations are confirmed by the figures because, according to the ANIA (the Italian Insurers’ Association) the average price of automobile insurance policies in general has dropped from €562 in 2011 to €411 in late 2016.

This has had direct benefits for Italian insurers:

• According to the ANIA, there are 20% fewer claims than for traditional policies, with a form of self-regulation operating.

• The claim management process is more efficient, thanks to the accurate information transmitted by the telematics boxes.

• According to the audit firm PwC, the combined ratio for the sector is thought to have dropped from 103% in 2011 to 93.6% in 2015, which coincides with the arrival of telematics.

Above all, telematics are enabling Italian insurers to offer new, innovative services by establishing numerous partnerships to form an ecosystem (consisting of start-ups, garages, etc.) covering breakdown assistance, automatic support in an emergency, vehicle theft and location notification, and alerts if a vehicle is damaged or moved, etc. In certain cases, the system installed on board the vehicle can even transmit an alert if it detects unusual driving behaviour.

According to the ANIA, even though other causes may also have come into play, the volume of premiums issued in the automobile sector dropped by 24% between 2011 and 2016. But the sector has seen a resumption of positive technical results since 2012.