Enterprises are increasingly operating in a dynamically changing and fluid environment. They are constantly changing gears just to keep pace. CXOs are constantly looking for ways to overcome or create disruptions in a world becoming increasingly complex. Infosys Consulting Blog gathers a community of subject matter experts who are driving pragmatic conversations around that which is changing and that which needs to be rethought, redefined and redesigned for enterprises to achieve market-leading performance roadmaps.

« September 2014 | Main | December 2014 »

October 31, 2014

Connected Car: Creating a New Insurance Industry

The opportunity for the Connected Car market is huge both in terms of revenue and benefits and is close to the tipping point where connectivity in cars will become a mass market. Auto insurance plays a key role in connected car ecosystem by helping Insurers create value added services for its policyholders.



Today's P&C Insurance industry is dealing with matrix of business drivers like addressing customers' need for value and maintaining their loyalty while finding ways to save money. Companies are compelled to adopt innovation for their survival and success driven by two key factors that are creating a paradigm shift within insurance industry:

i. Consumer pull, where the new generation consumers are digitally savvy and are constantly connected (Fig 1)

ii. Market push, where consumers are open to buying insurance from internet giants like Google and Amazon (1)



Evolution of Connected Consumer

Consumers today are experiencing constant connectivity via smartphones, GPS, and various ubiquitous entertainment devices throughout their daily activities. This paper is the first of 3-part series, and will focus on Connected Car. The next two parts will discuss applicability of Internet of Things in Connected Home and Life.


Connected Consumer is expected to have exponential positive impact on many industries by 


opening up new revenue streams, facilitate new business models, drive efficiencies, and improve the way existing services are delivered to create a global business impact worth as much as US$4.5 trillion (2)  (with total number of connected devices reaching 24 billion (3)  worldwide by 2020). However, capitalizing on this enormous opportunity requires cross-sector collaboration to fully realize the power of mobile.  



Applications generated from Connected Consumer will help generate services related to insurance telematics, infotainment, vehicle-to-X (4)  communication, health monitoring, and usage based insurance (including PAYD - Pay As You Drive and PHYD - Pay How You Drive). According to the survey done by GSMA, connected car will generate over a trillion dollars of revenue by 2020, of which approximately $500 billion can be derived from various insurance products and services.


Connected Car

Currently, there are over 1 billion smartphones in use, which account for more than 55 billion apps downloaded. By 2015, another 1 billion smartphones will be in use. On top of this, 75% of smartphone users say that it is important to connect the device to their vehicle. Allowing users' smartphones to seamlessly connect to in-car technology helps bridge the gap between device ecosystems, and helps personalize the overall automotive experience.


A connected car ecosystem can be segregated into four categories based on value generated from insurance products and 



1.               Customer Experience: value added services such as smart roadside assistance, proactive vehicle diagnostics and machine vision will dramatically enhance policyholder engagement, experience and satisfaction levels. This will results in increased customer retention

2.               Commerce: With the help of Usage Based and Behavioral Based Insurance, Insurers will be able to personalize underwriting at individual level with dynamic rating, i.e. a policy holder's premium can get automatically adjusted based on the driving behavior. Additional economic benefits include faster First Notice Of Loss, reduced appraisal process, and early detection of fraudulent claims by connecting events (accidents) to claims systems

3.                Infotainment and social engagement: With 73% of Gen X and Y being engaged in social activities (5), connected car products and services amplify the engagement by adding gamification and rewards, connecting with pedestrians, peer validation of offerings, and assisting driver with proactive decisions like traffic management and safe driving

4.               Communication and Marketing: Data generated from driving behavior helps Insurers with targeted campaigns, personalized messaging and improve upon unaided brand awareness.



Connected car data and Insurance Telematics


Connected car sensors and devices generate large quantities of data that need to be measured and interpreted for telematics applications. Insurance telematics is a means of pricing auto insurance policies based on monitoring where, when and/or how the motorist drives. By installing or embedding telecommunications devices into vehicles to transmit real-time driving data, driving habits, and road and weather conditions, insurers can measure and price premiums more accurately, provide customized services, improve safety and reduce claim costs. 


Telematics data is expected to generate overall market revenue of $40 billion by 2016 with an annual growth rate of 22% (6) . Increase in after market non-embedded hybrid solutions like Ford SYNC and Automatic will commoditize the devices. According to iSuppli research study that more than 80% of new vehicle sales are expected to contain some form of telematics unit.


Telematics data collected from in-car and around the car sensors and applications help Insurers develop analytical models that enable products and services to realize business value of 12-18% annually (7) . These include revenue generated from new and retained business, and cost savings from claims processing. 




Figure7 : Potential business value from Connected Vehicle (8)



Use Case.jpg

Connected Vehicle Technology

In order to support the inter-connectivity across various service providers, content providers and device manufacturers, Insurers need to have a robust platform that is modular, stateless and built on standardized Representational State Transfer interfaces. The platforms need to be cohesive and allow end point delivery support on multiple form factor devices like smartphones, tablets and PC).  The architecture needs to include:

•             Customer Management

•             Third party management

•             Notification engine

•             Services engine

•             Billing and payment engine

•             Data manipulation and validation components

•             Device management

•             Analytical engine


There are multiple vendors like Microsoft, Bosch, ThingWorx, RedHat, etc. that offer readily available services-based platforms which can be customized to insurers' needs. More details on connected vehicle technology can be obtained from


Infosys Advantage

Infosys brings years of experience in business, technology and operations with a myriad of assets and accelerators to enable Insurers speed-to-market products and services. Infosys has strategized and deployed large-scale solutions with fortune 100 insurance providers and auto manufacturers in the areas of digital enablement, speed-to-market enablement, new product innovation, technology optimization and application rationalization.



1.        Source: Accenture Global Research, 2014

2.              GSMA study of connected life impact by 2020

3.              Machina Research estimates that the number of total connected devices is expected to increase from more than 9 billion today to 24 billion in 2020, and within that, mobile connected devices will grow 100 per cent from more than 6.5 billion today to more than 12 billion in 2020

4.              'X' is a generic letter used for cars, pedestrians, infrastructure, smart grids and driver

5.              Pew Research "Social Media Update 2013"

6.              Source: ABI Research, iSuppli

7.              Source: Infosys analysis from surveying top US Insurers

8.              Source: Infosys survey and analysis