Is a New Business Model Needed in the UBI Industry?

Is a New Business Model Needed in the UBI Industry?

Being that the personal automobile insurance is the largest in the United States, it is safe to say that people are beginning to look to safe driving to save money. Typically a person’s driving record, credit record, education level, and geographical coordinates are all factors that are taken into consideration when dishing out ones premium. Since UBI has been introduced, things have drastically changed. UBI gives drivers a brand new start. UBI has made driving a lot less biased, in the sense that gender and age no longer matter. Safe driving will now be the key factor in determining your premium. UBI’s encourage drivers to drive safely, and in turn they will be rewarded.

Unfortunately UBI has become a controversial topic due to privacy issues. Many individuals do not want others to know where or when they have been driving. A recent survey was given to drivers and the results showed that about 50% of surveyors would allow a device to be installed in their car if it meant that it came with a nice discount. Personalized premiums would be very beneficial to a consumer who is a safe driver. The “halo effect” is shown here because when people realize that their driving can affect their insurance costs they will know that they need to drive more carefully.  UBI goes far and beyond helping people save money, there are also features that will tell a person to slow down when they are encountering slippery or unsafe road conditions.
Another advantage of UBI is that it can be used as a tracking tool. This makes theft a lot easier to deal with being that you can trace the cars through the telematics device. Delays in reporting accidents to insurers would also be reduced, and help with liability investigations. Safety above all is the most important factor when putting drivers on the road. A new business plan being executed is called a teen driving “resume”. This “Resume” can help parents of teenage drivers evaluate their son or daughters driving habits through UBI. The “Resume” consists of weekly emails that show where the child has been, how fast they drove to get there and how well they operated the vehicle. This is a great selling point for parents who want to keep their children safe.
The biggest goal here is for insurance companies to be able to match premiums more closely with actual risk. If the drivers choose to use the product and they choose to drive more safely then they will be rewarded with a lower premium. UBI has a lot of opportunities to offer for the future of automobile insurance. Recent research has displayed that by 2017 the number of telematics users could reach 89 million. Once companies begin to adopt these new policies and products, there is no doubt that telematics will then reach its tipping point. 
            In conclusion, a large enough portion of customers started to see substantial savings as a result of participating in UBI programs. UBI technology is now advanced to the point that insurers can deliver attractive, branded devices that are easily installed by customers. HopeRun offer OBDII Devices, web portals and mobile apps that allow customers to see their driving behavior data and easily translate that to expected insurance savings, and offer coaching to help customers improve their scores and increase savings.
Are you looking to launch your first UBI pilot program? Contact HopeRun today!     
Lucker, John, Stephen Packard, and Mark Hill. “Telematics: Driving the Automobile Insurance Market Through Disruption.” Deloitte. N.p., 2013. Web. 30 Apr. 2013. http://www.deloitte.com/assets/DcomUnitedStates/Local%20Content/Articles/Financial%20Services/Insurance/US_FSI_TelematicsPOV_072412.pdf

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