Usage Based Insurance – the New Normal? – E&Y Summary Report

Article Synopsis :

In today’s “sharing economy” insurance consumers expect the same level of simplicity and transparency they get elsewhere.

UBI is a closed-loop risk ecosystem measured and priced in real time

In the monograph  “Usage Based Insurance – the New Normal?”, EY asserts UBI as an opportunity for insurers to tailor products to customers’ specific behaviours and usage patterns, with greater flexibility, personalization and specialization.

Though there are currently 165 active UBI offerings across 35 countries encompassing five million policies, this still represents less than 1% penetration. EY expects this number to jump to 15% by 2020.

UBI holds the potential to reduce claims costs 40% and policy administration costs by as much as 50%. Evidence also suggests lower acquisition costs and more accurate pricing. The bad news is substantially lower premiums. The typical UBI solution for auto insurance takes six to nine months to deploy, including:

• UBI configuration and product design
• Actuarial analysis and market research
• Systems integration
• Website and portal development
• Launch, roll-out and change management

Beyond “pay as you drive” (PAYD), EY envisions telematics-enabled “pay as you live” (PAYL) policies, utilizing real-time health and other contextual data to enable disruptive new products in life and health insurance.

Link to Full Article:: click here

Link to Source:: click here