UBI is gaining momentum with wider acceptance of telematics data

Mobile devices are revolutionizing how telematics data is captured

  

The humble beginnings of UBI

About a decade ago, a handful of traditional insurance companies began to innovate and offer usage-based insurance (UBI) programs in the U.S. These programs offered mileage-linked discounts by utilizing a combination of GPS technology and cellular systems that tracked miles driven. The next evolution was to directly tap into the vehicle’s OBD port and get more reliable trip data along with vehicle diagnostics that provided a larger data set to redefine appetite and enhance products. Fast forward to now, UBI programs have started to rely heavily on telematics solutions that have expanded their data capture including reporting on real-time driving habits (behavioral telematics) of policyholders.
To comprehensively assess a risk, insurers can now count on cost-effective solutions that capture not just the mechanical metrics, but also the data related to exposures caused by individual driving habits like phone distractions, speeding, unsafe turns, etc. Telematics-enabled UBI allows underwriters and analysts to collect this ever-increasing amount of real-time driving information and come up with tailor-made insurance products and competitive pricing models for their target markets. This led to the growth of several UBI products such as Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), and so on.

Embrace Telematics-led revolution across the value chain

Telematics data was ignored from the underwriting standpoint at first due to the lack of conclusive evidence of a correlation between driving behavior and loss ratios (or profitability), based on which pricing decisions could be made. Data then was not dependable because user adoption was poor, technology was new, and the information gathered was insufficient. It is no longer the case. The rapid evolution of technology, advanced telematics solutions, and a greater appetite of the end user to share their data, has opened doors to an incredible amount of information being available that can be converted into actionable business strategies. Data scientists have uncovered new conclusive evidence that improvement in driving habits does impact the bottom line, and that it should be a part of the overall risk assessment.
Carriers today are under more pressure to reinvent insurance products that meet the changing needs of consumers while trying to remain profitable and competitive. Timing is perfect! Solutions based on telematics technology are now delivering deeper insights into risks, with behavioral trends, new scores, and predictive indicators that allow pricing of policies to suit and fit individual needs at competitive premiums. Mobile device-based telematics is gaining a huge momentum as this platform solves the chronic adoption issues, in addition to serving as a channel to advance a digital transformation agenda.
Even during the claims adjudication process, telematics data is playing a major role in claims settlement with greater efficiency, without risking customer satisfaction and loyalty. Innovation is at its peak with a variety of solutions and methods that can capture relevant data for loss event analysis.

The UBI predictions

America is the largest auto insurance market in the world with currently 5 million UBI policies in force. According to a report from IHS Automotive, close to 12 million consumers globally subscribed to UBI and this is expected to grow to 142 million globally by 2023. A Tower Watson survey shows that more than 88% of Millennials are interested in taking out a UBI policy, versus 74% among all other age groups, making it a more popular product among the growing younger generation.

Ride the UBI wave to stay relevant

The underwriting side was typically the entry point for telematics programs. Telematics offers a broad set of opportunities to insurers to identify specific opportunities or improve their existing processes. Telematics creates value for the insurance business in the following five areas: Risk selection, Risk-based pricing, Value-added services, Loss control, Loyalty and driving behavior improvement programs.
In the years to come, underwriters of personal and commercial auto lines will face an increasing pressure to come up with products that match the pace of technology advancements. As the telematics-based UBI revolution evolves, insurance carriers that still want to stick with non-UBI products may face problems arising from poor underwriting performance, inefficient administration and higher chances of fraudulent claims. This will subsequently lead to slow decision-making processes, which affect customer service and sustainability, resulting in poor customer retention.

Ride the Digital wave at the Connected Car Insurance USA 2017

Harness the power of data

Underwriters who are already utilizing real-time driving data, Big Data and IoT to design UBI products, have only seen the tip of the iceberg. There is immense potential in data to enable revolutionary auto insurance products of the future. However, it has been projected that only 36% of insurers may use UBI by 2020. To stay ahead of the game, it is crucial that underwriters leverage data to create products which are profitable to the insurer and their consumers.

Top 10 Mobile Telematics Features

Mobile Telematics is the integrated use of mobile communications, vehicle monitoring systems, and location technology in order to track certain metrics, both for application in vehicles and with the control of vehicles on the move. Insurance companies are increasingly recording driver information via in-car devices,armingcarrierswith vital informationto set insurance premiums that reflect the unique driving style of individualmotorists.

As insurance companies strive to leverage analytics for improved decision-making, telematics retains the potential to bring the most significant transformation to insurance operations to date. Here are the top 10 mobile telematics features offering the newest operational efficiencies, helping you attain maximum return on your investment.

Insurers Gain Invaluable Insights with Xemplar Telematics - Usage Based Insurance Telematics

Telematics refers to the use of in-car factory-installed and aftermarket devices or applications to transmit data in real time back to an organization, including data about vehicle use (for ex: miles driven, speed and location using GPS), maintenance requirements, air bag deployment or automotive servicing.

Insurers' record driver information through gadgets/devices in passenger cars, which allows them to set-up insurance premiums that denotes the driving style of drivers.

Technology, Discounts, Customer Education to Drive Telematics Auto Insurance

Insurers are recognizing the importance of discounts to penetrate U.S. and Canadian markets. But this calls for the combination of product features.

Something seriously required in favor of the auto insurance policy holders in United States of America and Canada. UBI adoption is growing at a frenetic pace in North America according to the figures released by BI Research. Market watchers are keenly observing the growth of auto insurance and the factors that can pose challenges to auto insurance industry. Figures depict a rosy picture. Telematics based auto insurance growth rose from 4.1% in 2015 to 6% in 2016 in North America. The growth is pegged at 19.2% in 2019. What is the role of telematics expertise in expanding market reach? Can discounts increase the subscriber base? Is there any pitfall? Let us explore.

Is Xemplar Value Added Services a Market Disrupter?

It’s a critical time in UBI with connected car meets the connected world throwing up challenges as well as opportunities.

 Mobile telematics comes with value added services like usage based insurance (UBI) which is impacting the vehicle telematics and insurance telematics sectors. Studies have found that UBI is all set to become a market disrupter disturbing the established players and traditional insurance models in the vehicle insurance segment. According to Yahoo Finance report over $21.8bn of automotive premiums will be generated by the Usage-Based Insurance market in 2016.

 Smart phone Based UBI programs the Key Market Determinant

Value added services in mobile telematics will play a key role in market disruption. Currently the PHYD/PAYD insurance falls under four categories:

• OBD-II based UBI programs
• Smartphone based UBI programs
• Hybrid based UBI programs
• Black-Box based UBI programs

 Telematics insurance growth is gaining traction. From 2.8% in 2014 it grew to 6.3 in 2015 and 9.3 in 2016. The projected growth is 19.2 for 2019. Nielsen’s 2015 Insurance Track survey has found that Millennials who comprise 44% are more likely than the average consumer to use a device from their insurance company to track driving behavior in exchange for discounts. UIB is all about discounts for good driving behavior and surcharge for faulty driving behavior. Nielsen’s survey indicates the inclination of Millennials to deal with insurance companies through their smart phones. Because of this stronger reason smart phone based UBI programs will emerge as the key determinant of telematics insurance market relegating other three PHYD/PAYD insurance models to sidelines.

 Role of Value Added Services in Mobile Telematics

Now let us come back to value added services in mobile telematics. If drivers are tracked effectively this can helps in saving time, money, fuel etc. Telematics geofencing software helps in locating the vehicle, entry time and exit time from geofence as well as average time spend in transporting. To be specific fleet managers will be in a position to regulate driver moves on usage of time and fuel from control room. Moreover, if the driver took a different route other than prescribed route or asking the rationale of ‘why a different route was chosen’ will help in setting driver accountability. This will help in tracking incidents like rapes which are sometimes happen due to driver misbehavior. Geo fencing and breach notifications are value added services featured in mobile telematics.

Insurance Requires Efficient Two-way Communication with Customers

Connected car with connected devices’ will be next disruption force in the insurance telematics industry. The 7th Annual Conference and Exhibition on Connected Car Insurance USA 2016 to be held from 7-8 September, 2016 at Radisson Aqua Blu, Chicago, the largest and most informative forum for executives from across the connected car and motor insurance industries will invite lot of attention on this topic. Prime Technology Group, one of the sponsors of this event has responded to the challenge ‘connected cars with connected devices’ with Xemplar a mobile telematics solution that enables fast and efficient two-way communication between insurers and customers.

Shared Driving Data Has Become a Reality

Automotive technology has come a long way. From trying to navigate using physical maps to GPS that points the exact location you are at, technology has evolved and still continues to do so. Today, we can hardly function without the GPS. Technology takes it up a notch and has begun determining how we drive.

Telematics – the latest technology that integrates telecommunications with transportation to make transportation data available in real-time. This technology not only includes navigation and traffic information but also actual driving data. Telematics collates driving data by monitoring hard brakes, rapid accelerations, speed variations, average speed and parking information.

Use of driving data

Who requires driving data? While I may be curious to know how I drive, not everyone is interested. However, there are certain industries that actually benefit from this information. Hence, the purpose of collecting driving information is not focused on individuals who want to improve their driving skills as much as bigger organizations.

Telematics: Unlocking the Futuristic Auto Insurance Strategies

The auto insurance industry is embracing mobility, big data and cloud technologies to provide a seamless experience in insurance policies to customers in the areas of driving history, updates on vehicle health status, feedback on driving skill and so on. The influence of technology on auto insurance industry is manipulating the old insurance strategies and its known fact of inadequate use of technology. But the latest development in vehicle telematics is manifesting the pathway of customers with immediate rewards towards insurers in a unique way, with less complexity and more flexibility in all aspects of auto insurance policies.

In the past, customers were reluctant to pay additional premiums and it was mandatory to avail insurance policy benefits. But with the introduction of vehicle telematics, customers or policyholders can greatly reduce the unnecessary insurance premium charges by showing good developments in their driving skills. It’s like Pay How You Drive (PHYD) concept wherein your auto insurance policy premium is directly dependent upon the nature of your driving behavior.