Usage Based Insurance Adoption is Growing Rapidly
The time is right for insurance telematics. Technologies have advanced substantially, including data-collection technology, communication techniques, and data analytics, bringing more intelligence and new capabilities online.
UBI – Where We Are Today
The total cost of ownership for Insurance Telematics has dropped dramatically over the last decade and projections from several sources point toward ongoing cost reductions. New data-collection methods, including those provided by mobile and hybrid solutions, further reduce the cost of the technology, and this downward cost spiral is expected to continue.
These reductions signal a shift in the market and become important when constructing a business case for UBI. Business case considerations continue to be a widely discussed aspect of insurance telematics when determining market entry strategy. A knowledgeable telematics service provider (TSP) can help weigh the issues and tradeoffs when evaluating the business case for
There is a Critical Mass of UBI Programs
Insurance telematics technology is maturing at a rapid pace. The initial stage, which has already come and gone, focused primarily on cost factors. During the initial UBI ramp-up period, development concentrated on providing value for insurers, dealing with deployment cost factors, implementing back-end communications, and deploying OBD (on-board diagnostics) technology. The engagement was largely confined to participants within the auto insurance eco-system.
In its present-day form, UBI offers more expansive possibilities. There is an increased focus on extending value to insurance firms, consumers, and partners, as well as enhancing pricing models. Customer relationship management is much more important. Also, agile technology and new data collection mechanisms, including highly mobile solutions, are being explored as a way to align with changing consumer lifestyles. The connected car ecosystem is growing, bringing numerous opportunities for enriching customer experiences by catering to specialized interests and meeting customer demands for more convenience and support. As the connected car ecosystem expands, it is moving rapidly into an era of enhanced driver intelligence.
The initial model used by first movers typically structured programs solely around the attractiveness of discounts to customers. Today, there is a far greater understanding of the potential to provide additional services that highlight customer convenience, safety, more direct relationships, and better communication with the insurer. By providing these types of services, insurers can successfully establish long-term relationships with policyholders, providing incentives coupled with the pleasures of driving. These incentives can now be informed and shaped by the deeper insights provided by telematics data and the intelligence derived
Looking ahead, the connected car ecosystem will likely flourish as it ushers in an era of sophisticated data analytics and improved scoring. More powerful mobile applications, deeper Internet of Things enablement, innovative new data-collection options, optimized policyholder personalization, and extensive value-added services will develop over time.