CalAmp looking to take “a prominent position on the [UBI] stage” with Crashboxx acquisition

By Sara BrowN & James Brehm

True—executive management of publicly traded corporations tend to be reserved in earnings calls. Lucky for us, we don’t have to be. Michael Burdiek, President and CEO of CalAmp this week used a theatrical metaphor to explain the company’s position in the usage-based insurance marketplace, saying, “With Crashboxx, we’ve moved into a front row seat. Over the coming year, our objective is to work into a prominent role on the stage.” Talk about understatement. We’re pretty sure we’re looking at an eminent sweep of the Tony Awards.

Just a few months ago, we released an article on UBI based on countless interviews with carriers, MVNOs, platform providers, and major insurers, concluding that phase one of the insurance revolution—that based on reduced premiums—though continuing to drive growth, is actually holding back the expansion of UBI due to lack of meaningful value-add for either the insurers or the insured. Phase two looms large in the hearts and minds of all interested parties—when real shareholder value arrives in UBI version 2.0, when sticky, next generation, value-enhancing software solutions are included.

And with the immensely affordable acquisition of CrashBoxx (just $1.5 million plus incentives), it seems CalAmp has brought us closer than we thought. The organization was founded by auto industry veterans with a deep understanding of the vehicle and potential crash metrics, who bring with them a lot of important IP. Thanks to their unique experience, they are able to deliver previously unimagined information in real-time, potentially changing the face of UBI.

In discussions last week with not one, not two, but three tier-1 MNO’s, a desire to provide value added services to their customers was a key theme. In fact, one MNO stated their need and desire to “partner with best of breed companies who provide value-added services to Insurers.” This is why this acquisition is so important to the industry - a tier-1 hardware vendor acquiring a best of breed application to move up the value chain and provide advanced services.

Imagine having a device installed in your vehicle, connected to the OBDII port, communicating with your insurer. You get into an accident. While you are swapping insurance information with the other accident victim, your insurer calls you. They tell you that they have a wrecker underway and an appointment scheduled at Bob’s Body and Paint, and that Bob has been notified to not only order a new right fender, but also a bumper, the bumper fascia, and all the necessary bolts and fasteners from a local parts supplier. That’s service.

Through the use of a solution like the one described with Crashboxx, software not only speeds the time to fix via claim processing automation, it also identifies which parts of the car were damaged, and can tie in with other BPM systems to order parts, schedule repair, locate a rental car, and keep the customer happy.

We are particularly impressed with their bodily-injury risk assessment, which is likely to both enhance the effectiveness of emergency services as well as reduce fraud, and automated repair cost estimation—giving the insurer a complete picture of the exact damage caused by an accident (right front corner, vs. rear bumper, for example) and also speed repair time by directing both the driver and the insurance company to the body shop with parts in stock and automating payment even while the tow truck is still hooking up to the vehicle.

Better, yet, for CalAmp, the current solution is only a fraction of what their new team can deliver. Not only does the acquisition move CalAmp up the stack from simple hardware to value added services, it opens the door to offer high value services to countless other application types from fleet management to transport asset insurance.

In other words, we believe this is beyond big. It’s huge. No wonder the investment community responded as they did—not just to CalAmp’s Q4 and annual results—but to the potential brought about by this (extremely affordable) acquisition.

As CalAmp seeks to commercialize the Crashboxx offering by 2017, we will be watching closely to see a new round of growth for the segment, as well as enhanced value for consumers—who are likely to respond by dramatically increasing the number of cellular-equipped UBI solutions from the current 1.13 million in the U.S. to a significantly larger share of the country’s 339 million registered vehicles on the road.