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How To Get Rewarded For Driving Well In Southeast Asia

Telecommunications and informatics – or telematics – is making car insurance more personalized

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BY Tanya Mariano - 03 Nov 2016

PHOTO CREDIT: Getty Images

Car insurance has traditionally been based on factors including those beyond the driver’s control – age, gender, where you drive, for instance. But usage-based insurance (UBI) is upending this system. By basing premium price on a driver’s actual driving behavior, UBI claims to improve premiums for drivers, increase profit margins for insurance companies, and promote road safety.

In Southeast Asia, Raxel Telematics, one of the top telematics service providers in Central and Eastern Europe, aims to be the leader in this space. The company recently moved their global headquarters to Singapore, and in October announced their partnership with Singaporean insurance giant NTUC Income.

Says CEO Dmitry Rudash, “We enable insurance companies to provide differentiated services, personalized to the individual, which improves their loss-ratios and break churn cycles. In return, low-risk drivers do not overpay for insurance premiums and can get as much as a 50% discount for the renewal of their motor insurance."

Rewarding good driving behavior

Raxel Telematics supplies insurance companies with a device to track the behavior of those behind the wheel, capturing things like abrupt braking, rapid acceleration, speed, mileage, and other relevant information (the device lacks a GPS/GLONASS module and thus cannot monitor a car’s movement). The data is then analyzed to evaluate the level of driving risk, and relayed to insurance companies so that they can adjust their clients’ premiums accordingly.

This incentivizes good driving behavior: the better you drive, the cheaper your insurance costs.

This favors some categories of drivers who have traditionally received less attractive insurance offers, like younger drivers for instance, who are typically seen as more at risk than older, more experienced drivers. But the company found that “more than 40% of drivers under 25 with less than 5 years of driving experience drive safer than motorists 35 years of age or older, with 10 years of driving experience. Offering the 40% a fair price on insurance is only possible through telematics.”

They've also created Drive Master, a mobile app that lets drivers monitor and get feedback on the quality of their driving. The app’s launch reflects the company’s belief that mobile telematics is the future even if the market is currently dominated by on-board diagnostic devices.

Commercial telematics in Southeast Asia to reach $1.8 billion by 2020

Worldwide, there are currently 12 million drivers using telematics-based insurance policies. This number could grow to 100 million cars by 2020, “resulting in UBI becoming a market necessity,” says Rudash.

In Southeast Asia, the company projects insurance premiums to be worth $3 billion and the commercial telematics market to grow to $1.8 billion.

The move to Singapore reflects this optimism. “In just a few months we have created a pipeline the size of several million dollars, and have signed partnership deals with insurance and transportation companies... We opened the head office in Singapore to support these signed deals, and develop the product and business closer to our clients.”

It’s an ideal place to set up a global head office, says Rudash, with plenty of great opportunities for IT companies and a favorable legal climate. “As a venture funded company,” he says, “we have to be conscious of legal protection, of the rights of the founders as well as investors, along with decent intellectual property protection. It's hard to find another country in the region with such overwhelming rule of law as in Singapore.”

Combining technical expertise with industry knowledge

This isn't Rudash’s first venture. While at university studying mathematics and physics, he started two projects based on high-energy physics technologies. One was a professional hardware tool for 3D computer-aided design and drafting, and the other a hi-tech solution provider for the pharmaceutical industry. “The first project was sold as an intellectual property and integrated into a third-party product. The second one still operates as a successful business,” he shares.

Prior to forming Raxel Telematics, he had worked for insurance companies for many years He coupled this experience with his technical background and deep expertise in both hardware and software development, and with a small team set up the telematics service business.

“We did some research to see what the main trends are in the industry. The European market was dominated by heavy on-board devices (OBD), while telematics providers in the USA had just developed their first mobile app solutions. We considered this mobile approach a future key trend,” he says. “But in our view, current solutions weren't leveraging the great opportunity to interact with clients: giving them feedback on their driving behavior, or analytics and recommendations on how to improve their safety while driving to get better discounts on their premiums. This analytical service became one of the strongest features that differs Raxel Telematics from the competition.”

New territories, new products

Right now, the company’s major barrier to growth is human resources. “The size of opportunity is huge,” says Rudash. “The previous successful implementations drove a significant amount of new prospective customers, and we simply can't cover them all with the few people we currently have in the region.”

He says they plan to continue aggressive growth in the insurance market vertical and expand their reach in Southeast Asia to markets such as Malaysia, Thailand, Indonesia, and the Philippines. “In [the fourth quarter of this year], we are launching a new set of products that tackle two other huge markets – automotive OEMs and transportation companies, and are planning to do further business development in those fields.”