Automotive > Infotainment & Telematics Blog

State Farm, Hughes Giving OnStar a Wake-Up Call

by Roger Lanctot | 8月 03, 2011

Speaking at the Center for Automotive Research’s Management Briefing in Traverse City this week, OnStar’s president touted the organization’s plans to pursue initiatives in global markets from Latin America to the Middle East. We hope OnStar is not losing sight of some basic blocking and tackling opportunities closer to home.

OnStar has yet to realize the monetization opportunity of its extraordinarily powerful platform. That so-far missed opportunity was nowhere more in evidence this week than with the announcement from State Farm and Hughes Telematics (HTI) of an aftermarket telematics system offering everything from vehicle diagnostics to stolen vehicle tracking and usage-based insurance – all integrated and delivered via the Internet and a smartphone application.

The State Farm announcement pointed up OnStar’s failure to create its own unique insurance solution somewhere along its 15-year history. Imagine for a moment, a dealership insurance selection process to be handled by the F&I department that would allow customers to check a box authorizing OnStar to share their driving data with their insurance company in order to receive a discount.

It is especially noteworthy that GM for years had a captive insurance partner in GMAC which, to this day, only offers an odometer-based insurance product to OnStar customers. Of course, GMAC is no longer owned by GM and this insurer’s poor ranking (based on number of policies) in the industry is a further reflection of the greater failure of OnStar.

Insurance companies would like nothing better than to pay GM for the customer data necessary to manage the usage-based insurance model. GM’s failure to foresee and enable this has left the door open to a budding telematics aftermarket and it is just the beginning of an emerging battle for control of the customer.

The importance of the State Farm launch goes well beyond the simple proposition – at least it seems simple – of an auto insurer plugging a module into a vehicle’s OBDII port. The State Farm initiative reflects the importance to State Farm of altering its relationship with its customers.

State Farm's emergency button will now be increasingly available to drivers in need of assistance at crash scenes. This is a fundamental rewriting of the rules of post-crash protocols as auto insurer State Farm will now have the opportunity to not only take direct responsibility for post-crash customer care, but will also have a hand in post-crash vehicle care. (It may seem crass, but it is vital to State Farm’s financial interest to handle this proposition directly.)

There are other new opportunities inherent in the State Farm offer. Automobile dealers around the country will be well advised to contact one of the 18,700 agents in their vicinity to bring them in for State Farm UBI days < - that’s my idea, State Farm, but it’s not trademarked.  (Worth noting that State Farm has described no such plan or initiative - but, hey, it's time to start thinking outside the box!)

Not only might drivers be eligible for discounts, the smartphone app provides a diagnostic x-ray application for the vehicle. Maybe that local dealer can get their service department’s phone number programmed into the device or have it set up to send an SMS message. (Again, just my crazy idea - not State Farm's.)


It’s not too late for OnStar to wake up and realize the platform’s real potential. It’s also not out of the question for OnStar to simultaneously pursue new product and service initiatives at home and abroad.

All OnStar needs to do to find success is realize that it is a 15-year-old start-up. It’s time to forget about that parent company GM, OnStar, and put the pedal to the metal. Any further delay for OnStar will only leave more opportunity for aftermarket players, like State Farm, to sweep in and steal the business.

Strategy Analytics' broader range of specific recommendations are detailed in: 

Additional insights: - OnStar: Time to Hit the Reset Button? - Lanctot - Insight - Strategy Analytics - #StateFarm, #Hughes Raise Usage-Based Insurance Bar - Lanctot - Insight - Strategy Analytics - #OnStar #FamilyLink Could Break Location Taboo - Lanctot - Insight - Strategy Analytics

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