Over the past few years, the Internet of Things (IoT), big data, and wireless communications have resulted in the emergence of various smart devices and applications, which today solve numerous industry challenges and help unlock new opportunities. The insurance industry is no exception to witness these developments. Developments in telematics, connected vehicle technologies and more have enabled the industry to make a shift from conventional models to highly efficient AI engines that can accurately assess risk.
This has allowed auto insurers to better understand the risk factors, which in turn, have enabled them to diversify their offerings, reduce costs, and streamline their operations. This concept is known as usage-based insurance (UBI) or pay-as-you-drive (PAYD) – a type of auto insurance that offers a better assessment of risk and measures a user’s premium based on the actual usage of his car. Driving speed, braking, acceleration, and other parameters are monitored and discounts are offered to the drivers on their auto insurance premium based on their driving scores.
The market for usage-based insurance is experiencing rapid growth in recent years. Driving it are the factors such as technological advancements in the field and benefits offered by usage-based insurance solutions such as cost-effectiveness, low accidents and vehicle theft possibilities, accurate and timely data collection, and lower fuel consumption.
More and more insurance companies across the world are getting attracted to the user-based insurance concept. There are over 150 deployments of UBI solutions across the world at present and the number is only likely to grow drastically in the future. According to a report published by Allied Market Research, the user-based insurance market is expected to reach $123 billion by 2022, registering a CAGR of 36.4% during the forecast period, 2016-2022.
A slew of launches took place in the field recently. One of them is Mitsubishi’s launch of the app for usage-based car insurance discounts.
The Progressive Group of Insurance Companies launched its ELD UBI program for commercial truck drivers in September 2018. In October 2018, Autonet Insurance introduced a new usage-based insurance private car product based on telematics for new and young drivers.
Mitsubishi Launches UBI App
In July 2018, Mitsubishi Motors, a Japanese automotive manufacturer, introduced an app for its car owners to allow them to enjoy discounts on their insurance policies. Functioning with the help of a novel version of the company’s app known as Road Assist+, the new system monitors information such as when, how, and where the cars are being driven. Upon the owner’s allowance, the data is transmitted to the Mitsubishi owner’s insurance company for a significant discount.
Besides offering discount on insurance premiums, the company also offers a reward system that allows owners to level up and receive extra benefits. Being a smartphone app, the product is not dependent on vehicle hardware. According to the company, the information which is gathered includes GPS and accelerometer data from the smartphone on which the app is installed.
ELD UBI Program Introduced by Progressive
Progressive, a provider of insurance for autos, trucks, motorcycles, recreational vehicles, etc., launched the Smart Haul, its electronic logging device (ELD) user-based insurance program for commercial truck drivers. The program saves eligible truckers at least 3% on their initial Commercial Auto policy period for just signing up and sharing their ELD driving data. Smart Haul is independent of the need the driver to get another device. The company compares the driving behavior of the trucker to that of similar drivers and determine savings based on recent driving history.
John Barbagallo, Progressive’s commercial lines president said that as more and more drivers are getting used to and comfortable with ELDs, turning this into an opportunity to save money for safe driving is bound to attract more truckers.
Autonet’s New UBI Private Car Product
Autonet insurance, a multi-award-winning insurance company partnered with VisionTrack, a leading telematics company to launch a new UBI product in the market. The aim of the launch is to help safeguard drivers and offer more affordable insurance policies for them. Designed for new and young drivers, the dashcam solution makes use of VisionTrack’s video telematics solutions to track driving performance. The dashcam feature in the product allows capturing of driving footage in high definition. It also has features such as motion detection, an ultra-wide lens, and loop recording.