Published: August 08, 2016
Allstate Chief Executive Officer Tom Wilson has recently launched an independent telematics arm of the company and has named it Arity. With this vision, he expects the stand alone business to grow by collecting data on drivers and selling analytics products to third parties.
Northbrook-based Allstate has always been active in the connected car insurance domain and has been using such technologies for the past six years to help clients drive safely and obtain rewards.
Tom Wilson, Chief Executive Officer, Allstate, said:
Arity can incorporate new data sources and enhance analytical capabilities in ways that we weren’t able to do when it was embedded in the insurance company. It’s a big enough platform today with the Allstate customers in it, and that will continue to grow, but we’d like it to grow even faster with a broader set of customers. It’s a good growth business which is one of the reasons we wanted to make sure it wasn’t restricted by the efforts of being inside an insurance company.
Allstate rival Progressive Corp. has used technology for years to track driver habits and offer discounts to its safest clients. The approach has gained appeal in other sectors. Verizon Communications Inc. agreed this week to spend $2.4 billion to buy a GPS vehicle-tracking company. The same technology can monitor drivers’ location and could even provide updates on when car owners might need a fresh battery, or a new vehicle. (via Bloomberg)
According to the company sources, the second-quarter net income slipped to $271 million, or 64 cents a share, from $355 million, or 79 cents, a year earlier. While Allstate may risk alienating some policyholders or potential customers, the company may be better positioned than Progressive to experiment with auto insurance.
The risk for even the biggest national companies is that the industry contracts faster than they can take market share from regional rivals. Continued safety improvements and the adoption of autonomous cars could shrink the U.S. auto insurance industry by 60 percent in the next 25 years, according to a KPMG report, which was launched in June this year.