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Quindell: Positive End to 2014 as Canada Leads Adoption of Quindell's Telematics Technology

So far, 2014 has been a mixed year for Quindell; it faced damning speculation from Gotham City Research in April (which has since been rejected) and a failed partnership with the RAC in September, which would have seen ingenie’s telematics services being made available to all drivers, not just 17 to 25 year olds, from July.

On the plus side, there has also been a number of significant wins, the most recent of which was announced yesterday, and Quindell is back on the up as we move into the final months of 2014. In fact, it was almost exactly a year ago that Quindell won a major deal which set the tone for things to come. That win was in the Canadian telematics market, and marked a first North American contract for Quindell when, in November 2013, it was awarded a five-year contract by CAA South Central Ontario, for whom it now provides its telematics technology.

Then, in February 2014, Quindell increased its share in U.K. telematics company ingenie from 43% to full ownership, making Quindell a ‘one-stop-shop’ for auto insurance, with service provision now covering:

  • Full scope BPO services: aided by its acquisition of Ai solutions
  • Health services: also built up through acquisition of ACH Group in January of this year
  • Legal services: including personal injury services for road traffic accidents
  • Analytics across the board.

The ingenie product is a telematics box, the size of a smart phone, which includes:

  • A GPS unit to capture when and where the car is driven
  • High frequency motion sensors which capture how the car is driven
  • A SIM card which is used to transmit the data via the EE network.

It is not new technology (it has been used for many years in commercial vehicles), but telematics is the ‘analytics of the moment’ in auto insurance and since drivers remain largely price sensitive, (and telematics boxes enable cost of premiums to be more aligned to performance), they will undoubtedly become much more widely used by car drivers.

At the time of its acquisition of ingenie, Quindell said that telematics insurance systems were that the heart of its growth strategy in technology. The first part of the strategy was to launch an ingenie-based driver product in Canada, which in April 2014 almost happened when Quindell and RAC formed a JV to create ‘Connected Car Solutions’ (CCS). Services were to be delivered from July 2014 in the U.K. and Canada, and outside the age bracket of 17-25 year olds. However, in September 2014, it was announced that Quindell would be buying back the RAC’s shares in CCS, with associated restructuring cost of £3.5m to Quindell payable over 18 months. Following a sharp dip in Quindell’s share price, the warrants that the RAC had received in exchange for its part in the deal, were rendered useless – having once been worth ~£125m.

But now comes the good news: a contract win, announced yesterday, with Aviva CanadaAviva has also had an interesting relationship with telematics. In 2005, Aviva Canada was the first Canadian insurer to introduce a telematics based auto insurance scheme, Autograph, but this was subsequently disbanded in August 2011 largely owing to cost. Likewise in 2008, Aviva U.K., through its Norwich Union subsidiary, also folded its PAYD offering due to a lack of interest. But now, with costs coming down and customers showing increasing appetite for usage based insurance (UBI) services, Aviva is taking a second stab at telematics, but this time, to some extent, plaingy catch up with its peers who have been offering PAYD and UBI services for some time.

Having re-entered the telematics market gently in mid-2012 with a simple mobile app (rather than through installation of black box technology), Aviva Canada, already a client of Quindell, will now be exclusively using Quindell’s telematics technology to support both commercial and personal LOBs (see NelsonHall Tracking Service article for further contract details).

In May this year, Quindell and Independent Broker Resources Inc. (a wholly owned subsidiary of the Independent Brokers Association of Ontario (IABO)) outlined a two pronged telematics growth strategy for the Canadian market:

  • Via ingenie: expansion into the Canadian marketplace with a telematics product for 16 to 24 year olds to be distributed exclusively through member brokers of the IBAO
  • A IBRI/Quindell general telematics offering that allows insurers to provide a broker-branded telematics service.

Until yesterday, Quindell had launched two pilot programs for the second option, and a further 17 NDAs had been signed with insurers across Canada. With the addition of the Aviva contract, Quindell’s telematics technology can be sold directly though the 1.7k Aviva Canada brokers.

This, coupled with the CAA win last year, puts Quindell in a strong positon to exit 2014; it also demonstrates that any potentially damaging noise from earlier in the year is not impacting Quindell’s ability to win business. At close of play yesterday, Quindell’s share price was up 9.6%.

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