Allstate CEO starts unit to grow 'aggressively' in telematics
Allstate Chief Executive Officer Tom Wilson created a stand-alone unit for a telematics business that he expects to grow rapidly by collecting data on drivers and selling analytics products to third parties.
The firm is named Arity and will also serve the insurer's own brands including Esurance, Wilson said Wednesday in a phone interview. Northbrook-based Allstate, the largest publicly traded U.S. provider of home and auto coverage, has been using telematics for at least six years to help clients drive safely and obtain rewards.
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," Wilson said. "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."
Allstate rival Progressive 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.
Wilson has been seeking to offset pressured margins at the car-insurance business. Allstate announced Wednesday that second-quarter net income slipped to $271 million, or 64 cents a share, from $355 million, or 79 cents, a year earlier. Wilson said the telematics business has tripled over the past three years.
"We've reached a million late last year in terms of active connections, and we expect it to grow quite aggressively," he said. "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."