The heart-stopping moment that shaped an insurance career

Company founder addresses the moment that changed his life and the future for brokers as insurance changes

The heart-stopping moment that shaped an insurance career


By Paul Lucas

The following is an interview with Paul Stacy, founding director of Wunelli, a LexisNexis Risk Solutions Company. He discusses the influence of telematics on insurance, its future, how brokers can stay relevant amid the emergence of driverless cars and the heart-stopping moment that shaped his career.

IB: Tell us how you got into the insurance industry - where did you get your start and did you ever plan to work in another industry?

PS: I certainly didn’t start out with any ambitions to work in insurance but a combination of factors led me down this path and I feel very lucky that I wake up most days eager to get started on the next challenge.  With travel between Europe, Asia, China and Australia I also wake up some days confused about what time-zone I’m in!

When I first left college in Australia, I had a degree in mining engineering complemented by a Masters in Maths. This gave me a great appreciation of basic engineering methods and problem solving and meant I could apply my naturally curious mind and hunger to find answers to business challenges in a range of industries.

From the age of about 21 I knew I wanted to be self-employed.  I went through, maybe 10 different business ideas in my 20s - one of which was to introduce pet insurance to Australia. However like most students, I left college with a sizeable amount of debt so I decided to work for a management consultant to get my finances back in shape. I stayed there for five years, it was hard work but a fantastic experience.

I then went to work for an insurance broker and it was while I was working there that I had an epiphany moment about telematics and saw how technology, data and analytics could fundamentally change motor insurance and save lives.  I worked up a business plan, secured investment and founded Wunelli with Sandy Dunn.

IB: Tell us about the incident where a driver almost hit a young child and how that affected you?

PS: This was the ‘epiphany moment’ for the creation of Wunelli and my career in insurance telematics. As I was leaving my house one day, my attention was caught by a car driving at speed into our quiet street. I could see the driver had lost control, they then had to brake suddenly to avoid a child who had run out on to the road. By sheer luck, both driver and child were fine but it was a real heart stopping moment which I remember vividly. The driver was young, clearly inexperienced and unequipped to deal with the situation.

I was already familiar with the concept of usage based insurance thanks to my background in insurance broking and technology but this one event made me think more deeply about the role of telematics and the important part it could play in improving road safety.

IB: How have you seen telematics evolve in recent years?

PS: It has taken time but confidence in telematics is growing – we see this in the insurance sector which is now starting to cover the costs associated with Usage Based Insurance propositions, among customers who want to be priced fairly based on their driving behaviour and by the Government. In a recent Parliamentary debate on young driver insurance, telematics was cited as a solution to help reduce accident rates and thereby, young driver premiums.

Looking at the cost of acquiring the data – first we had black boxes, then we had sophisticated telematics apps and now we have a 12V device that crosses the divide between the black box and the app. These developments have widened the data collection options for the insurance sector and helped drive down the cost of data acquisition. 

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The scoring of telematics data has evolved from simply measuring acceleration, braking and speeding to including a much broader range of parameters.  There is now a heightened focus on using telematics to detect distracted driving such as mobile phone use. Involving distracted driving in the rating process has been a good evolution.

The maturity of data is also now leading to greater insights, enabling insurers to predict loss relative to driving behavior and therefore focus driver engagement to mitigate those losses.  And at FNOL stage, telematics data is helping the sector expedite claims more swiftly and support investigations where necessary.

We’re on an upward trajectory.  With the advent of connected cars the need to assimilate data from vehicles is becoming more and more important for the insurance sector.

Personally, I would like to see telematics made mandatory for young drivers in the UK.  In Australia they are considering using telematics for all young drivers and in other markets round the world we are seeing an increasing move towards using technology to gain feedback on young driver behaviour to help reduce road deaths. So everything points to wider adoption of telematics policies not just in the UK, but globally.

IB: What are the next stages for telematics?

PS: Where do I start?  Most immediately a new 12V device will enable insurers to gather driving behaviour data at around 15% of the cost of a hard-wired device and provide the level of accuracy and data quality they need to scale for more drivers on the road. 

The 12V device is plugged into the cigarette-lighter in the car and doubles as a mobile phone charger. This is a real game changer as it means that motorists can gain all of the benefits of having a telematics policy, but don’t have to have a black box fitted to their car, they just plug in and go, taking the device with them if they buy a new car. 

Given the cost savings, insurers may be in a position to reduce insurance premiums which would be a pretty compelling message right now.  They will be able to offer all the usual benefits you would expect from a telematics policy such as collision detection so that immediate assistance can be offered, and a speedy claims process through greater knowledge of the circumstances of an accident. 

Eventually most cars will have the inbuilt ability to collect driving data but with the average age of cars on the road today at eight years old we’re still some way from this being ‘the norm’. 

In tandem with these developments we are also working with Motor Manufacturers - OEMs - to help create greater understanding around the data being delivered from connected cars. As an insurer you want to know the impact of safety features on vehicles such as AEB, the cost of repair, how that could translate to insurance risk, pricing and claims loss ratios.  Motor manufacturers also want this data to address issues they face with vehicle safety features and what that means for their customers and insurers.

In the longer term we plan to build a series of independent telematics data exchanges in different markets to allow a number of insurers to use vehicle and telematics data stored centrally in their quotation processes in a more standardised way.

IB: Do you foresee a time (particularly with the introduction of driverless cars), where insurers/brokers lose a large chunk of their automotive business?

PS: The emergence of the driverless car will have significant implications for the insurance sector during the transition from conventional vehicles to semi-autonomous vehicles over the next 10 to 20 years. Their rating and underwriting models will change fundamentally as safety enhancements in cars develop and connected car data brings in new rating factors. At the same time, the market will shrink due to affordability issues and the emergence of alternative mobility solutions such as car sharing. 

Ultimately, telematics will complement driverless cars because telematics, at its most basic, is getting data out of a car to monitor it. Driverless cars, from an insurance perspective will be treated like a product so the manufacturer needs to monitor its use, identify faults and so on to be able to insure it – telematics is the natural solution to this.

The survivors will be those who adapt and prepare for a data rich future now.

IB: How can insurers/brokers prepare for these changes? What can they do to stay relevant?

PS: If you’re not offering a telematics product already you may struggle to stay relevant. Along with pressure from beleaguered motorists facing higher and higher insurance costs and the Government who wants to encourage telematics take up as way to offer fairer pricing and incentivise safer driving, the data to come from vehicles and increasing levels of autonomy will force immense change in the insurance sector.  Those who are already collecting driving behavior based data to determine risk will be on the front foot. 

Telematics solutions have evolved to a stage where it doesn’t have to be complicated or even costly to create a telematics proposition. It’s vital they get on board to stay relevant as well as easing the inevitable transition to connected and ultimately driverless cars. Learning to embrace the inevitable changes is key.

IB: What have been the key influences on your career?

PS: Over the years I’ve worked with some great people who have inspired me, challenged me and who most importantly shared my vision that telematics could and does save lives.  Sandy Dunn, who I founded Wunelli with, is one of these people. Sandy taught me many things including how to handle people in tricky situations and how important your personal brand is.

Also the transition from owner-operator to large global corporate is one many founders do not survive. I understand this now. You need a very special manager to get this balance right. Lucky for me, I have a good one.

Also the team I work with at LexisNexis Risk Solutions is inspirational – particularly our data insight and commercial guys, most of whom have Phds or MBAs, are fiercely intelligent and never fail to delight me with what data can do or the value it brings.

The evolution of technology to record driving data has also been a key influence – we have worked with some great businesses that have understood our vision and delivered the hardware we needed to underpin our telematics propositions.
Finally, but most importantly, the insurers and brokers we’ve worked with over the years who put their trust in us when there were a lot of naysayers scoffing at the idea that people would share their driving data.

Related stories:
Car insurance set for a radical change
Driverless cars: What’s the real cost to the industry?

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