CANADA & TELEMATICS 1

CANADA & TELEMATICS 1

Telematics is expanding globally, with the US, Italy and UK leading EUROPE Market: Allianz making significant investment and partnering with OEMs. CANADA ~5% of insured private vehicles in Italy with telematics devices Market: Industrial Alliance Desjardins, IBAO OEM s driving development in Germany JAPAN USA Market: >5m vehicles with devices. Progressive leading. GMAC, Safeco, American Family, MileMeter, Travelers, Uniguard UK Market: Innovative business models deployed e.g. Insure the Box; Ingenie. ~15 live propositions. Mainstream insurers starting to move. RAC launching telematics as a service. Towers Watson and other partners driving development. ISRAEL Market: Aryeh Market: AIOI SOUTH AFRICA Market: Hollard, MiWay, DiscoveryInsure AUSTRALIA Market: Real Insurance 2

UK - significant development in telematics over the last two years The UK story so far What is next? 2004-2009 2010 2011 2012 2013 > Early entrants, launching PAYD products. Costs high, data challenges and benefits not realised ITB launch their mileage based product Multiple new entrants, evolving propositions starting to leverage the technology to focus on PHYD. Aviva and Confused also launched smart phone try before you buy apps and the first telematics aggregator appeared.. 2013 Gender Legislation Development of smart phone as device and feedback tool Changing attitudes to data privacy 2015 ecall: requirement for new cars to have emergency service call technology in cars 2017 Majority of new cars with telematics built in Rate My Drive 3 The market is moving quickly supported by major investment technology, customer and legislation changes

Canada - market/competitor timeline Brand 2005 2009 2010 2011 2012 2013 2014 + Launch Ontario broad based PAYD in 2005. Cancelled in 2009. Poor consumer uptake (<5,000 sold). Cost prohibitive to move to Gen2 OBD Launch of Mobiliz targets Parent & Child in Qc First active play in Canada at that time Launched Adjusto May 2013 Market for Ingenie & IBAO initiative Large TV & radio ad campaign Qc and Ontario Launched April 1 st cross channel using as offset to mandated decrease Allstate TD Meloche Many large players rumoured to be investigating but nothing visible at this time Launching to insurance and membership customers bases Target Q3 launch 4

Telematics What it is What is telematics? Commentary Different devices now for data collection: Professionally fitted box Smartphones stand alone or hybrid Device plugged into car by customer Connected cars with capability fitted at manufacture Opportunities to drive: Better UW and pricing individual to driver Claims analysis, reporting and management More distinct customer propositions and marketing More frequent value adding customer contact Telematics device When driving Where driving How driving 5

Telematics and insurance Model to assess market change Impact of telematics on Auto Niche Dominates Telematics is core part of motor pricing and product development Telematics as standard on auto policies Telematics technology widespread Insurer value chain elements remain the same, e.g. o Distributed through existing partners o Underwriting and pricing informed with inhouse data o Annual policies by price and benefits o Insurer manages customer relationship Telematics is additional rating factor Telematics limited to small percentage of customers (e.g. Young people, low mileage, etc.) Telematics technology only enabled on selected vehicles (or installed as needed) Insurer value chain elements remain the same Controller of data changes value chain Telematics technology widespread and included in all new cars Telematics as standard on auto policies Significant competition across all areas of telematics and insurance value chain, e.g. o Customers sell their driving data for best rate o Insurers left to white label products sold by OEMs o Breakdown service companies manage majority of upfront claims process Proposition-led game changer Telematics on small percentage of customers (e.g. Young people, low mileage, etc.) Telematics technology on selected vehicles (or installed as needed) Telematics/other providers taking significant portion of insurance value chain Stays the same Game changed Changes in structure of insurance value chain 6

Telematics RSA view of Canadian market in 5-7 years Impact of telematics on motor Niche Dominates Main driver for change: Car manufacturers entering insurance activities Uncertainty over final market position and speed of development Now CA RSA view of market development (2020) CA Stays the same Game changed Changes in structure of insurance value chain 7

Telematics Canada view Impact of telematics on motor Niche Dominates Existing insurer makes big play 20% likely to end up in this box Proliferation of telematics suppliers 30% likely to end up in this box Provider economics Actual realisation of telematics benefits Driver sophistication Poor motor portfolio performance Consumer economics Data ownership shifting New entrant (OEM) Regulation/legislation Connected car 30% likely to end up in this box 20% likely to end up in this box Stays the same Game changed Changes in structure of insurance value chain 8

Areas of opportunity in telematics are within short term reach but accessing full potential will require time and integration Integration & investment required Other? Client touch points and relationship building Claims cost management Segmented customer propositions Risk selection & pricing Significantly increase touch points per year e.g. 95% of Telematics customers used dashboard in last 30 days Improve customer insight and opportunities to cross-sell, retain Control of claim, quick triage and fault decisions, reduced fraud and BI, technology enabled processes, claims prevention Enables behaviour segmentation Hard wired boxes potentially economic for 25% of market......other devices open up market further 15 to 30% reduction in Loss ratio UK +50% reduction in collision frequency - UK 1 2 3 4 Time taken to achieve 9

Telematics & The Digital World Infrastructure to manage data A frequent and continuous dialogue Quicker cycle times More complex product offerings Delivery Platform (s) Data Complex & Evolving Landscape Sources Structured & Unstructured Direct & Contextual Regulatory influences Insurance Privacy Consumer Protection Unique evolution of the consumer dialogue Product Configuration Pricing (potential to reduce subsidization and correlate to well proven variables) Differentiation in offerings (acquisition and/or retention) Downstream offerings information, offerings, etc Customer Propositions

Where The Rubber Meets the Road (so to speak) In the end its about the score(s) Taking the data and converting it into: Insight Action Insight can include: Speed Cornering Braking GPS Distraction Crash diagnostics Contextual/environment influence Action can include: Messaging Price adjustment Risk selection 11

Risk selection & pricing; early results show significant upside Customer behaviours Underwriting dashboard Towers Watson: Higher risk drivers 10x as likely to have an accident; riskiest miles 10,000 x as risky as safest (Driveability data from 10 insurers in US) Market commentary from competitors and advisors indicate upside of ~17-35% reduction in COR Early results show customers with red messages have twice as many accidents...... 90%+ customers access driver feedback in a month...and 70% of customers receiving messages showing improved driving 12

Picking The Right Device 13

Client touch points and relationship building; telematics increases customer interaction and therefore the potential for loyalty Breakdown companies Engagement Motor Insurers Utilities Phone operators Telematics Motor Insurers Banks Annual Quarterly Monthly Weekly Daily...and more 1 50 365 Frequency of interaction 14

Questions? 15