Telematics in China: 2016 Update

by Wenli Yuan, January 20, 2016
Industry Trends
Asia-Pacific

Abstract

China has the world’s largest number of Internet users and the largest number of drivers. Many companies in China see opportunity in telematics and are investing in various devices, platforms, models, and services. Insurers are part of this telematics ecosystem.

In the report Telematics in China: 2016 Update, Celent analyzes telematics in China and related initiatives from insurance companies.

In June 2015, the China Insurance Regulatory Commission (CIRC) had begun commercial automobile insurance reform for premium pricing and terms management in six pilot locations. The reform allows insurance companies to develop their own coverage and calculate premiums that better reflect drivers’ risks.

Some small insurers could disrupt the market by introducing usage-based insurance (UBI), putting pressure on larger companies to study and invest in this area.

For the individual UBI market, pilot insurers are focused on providing various services or benefits to encourage more drivers to use the on-board diagnostics (OBD) device or mobile apps. Insurers are collecting more driving data and trying to use this data to set up their risk models. When the market is ready for UBI, these pioneering companies will have an advantage.

For the commercial vehicle UBI market, insurers are already collecting and analyzing data to improve pricing and working with companies to improve drivers’ driving behaviour and reduce claims.

Since 2014, many Internet companies (especially Baidu, Alibaba, and Tencent, known collectively as BAT) see enormous opportunities. Telematics platforms could be a portal for online-to-offline (O2O) services and various location-based services for drivers.

“BAT is entering the market to change car manufacturing, aftermarket devices, and services,” says Wenli Yuan, a senior analyst with Celent’s Asian Financial Services group and author of the report. “Insurance companies and technology solution providers should understand the telematics ecosystem and chose partners wisely.”

This report contains two tables and three figures.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

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Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

2

Auto Insurance Reform

3

Telematics Development

4

 

Telematics Ecosystem

4

 

Internet Companies Enter and Disrupt the Market

6

 

Other Initiatives in Telematics

9

 

Investment in Smart Cars and Driverless Cars

10

Insurance Initiatives

12

 

Telematics Value Chain

12

 

Device and Data

13

 

Insurance Value Chain

14

 

Insurers Invest in Telematics-Related Companies

16

 

Industry Standards and Shared Platforms

16

Conclusion

18

Leveraging Celent’s Expertise

19

 

Support for Financial Institutions

19

 

Support for Vendors

19

Related Celent Research

20

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