Paefgen, JohannesJohannesPaefgenFleisch, ElgarElgarFleischStaake, ThorstenThorstenStaakeAckermann, LukasLukasAckermannBest, JonasJonasBestEgli, LukasLukasEgli2023-04-132023-04-132013https://www.alexandria.unisg.ch/handle/20.500.14171/90316This whitepaper investigates the business implications telematics services and Pay-as-you-drive (PAYD) insurance in particular, from the perspective of automobile insurance providers. Specifically, it discusses - the PROFITABILITY and competitive dynamics of PAYD insurance, - a simplified BUSINESS CASE for a new market entrant with a PAYD product, - the present STRUCTURE OF INTERNATIONAL MARKETS for insurance telematics services, - DRIVERS AND BARRIERS for the focus markets Switzerland-Austria-Germany, and - the design of insurance telematics BUSINESS MODELS. With respect to PAYD insurance as an isolated offering, we show that the likelihood of commercial success is the largest for a new market entrant offering a PAYD insurance product. In this scenario, profitability of a business case depends primarily on two factors, technology costs and the reduction of the average claims rate in a PAYD tariff class that could not be formed by conventional rate-making approaches. Technology costs likely to reduce over time and with larger scale. The average claim rate, on the other hand, is difficult to project since it depends on the behavior of market participants after the introduction of a PAYD offering. Conclusively, the introduction of such an offering constitutes a risky endeavor that is subject to several uncertainties, but comes with the prospect of substantial profits in an otherwise saturated market. The presented business case is restricted to PAYD insurance. The market analysis and an in-depth interview study revealed that a range of REACTIVE telematics services is largely accepted today and has found promoters in most markets of Europe and the United States. Often, such services are bundled to increase the value-added while creating synergies in terms of shared technology costs. On the other hand, a second category of PROACTIVE telematics services, including PAYD insurance, has found only limited adoption. One key barrier for such services are privacy concerns of customers. However, innovative vendors such as INSURETHEBOX (UK) have demonstrated that these are manageable. Lastly, we provide a business model template for insurance telematics services. The template is validated with two exemplary offerings and can serve as an implementation-oriented decision tool for insurance companies and their partners. It combines the insights gained in the previous parts of this study. With the specific domains introduced in the template, insurers can more precisely estimate costs and revenues of telematics offerings and clearly define their market positioning. The paper closes with recommendations for action directed towards automobile insurance providers.enAutomobile InsuranceTelematicsPay-as-you-driveBusiness ModelsInnovationworking paper