Article Synopsis :
Usage Based Insurance (UBI) is an umbrella marketing term representing a collection of methodologies, technologies and business practices aimed at predictively assessing risk, creating value and improving safety.
“Usage-Based Insurance (UBI): Driving the User Experience” from Covisint explores UBI along four lines of inquiry:
- The evolution of reactive to proactive risk analysis: Insurers have long been trying to simulate real-world causal risk factors based on data provided after-the-fact by policyholders, typically after an accident. Today insurers are able to capture large amounts of raw telematics data in real-time. Barriers to widespread acceptance of UBI solutions include:
- Adoption – some customers are wary of UBI services
- Privacy – “big-brother” privacy concerns with data requirements
- Cost – hardware, connectivity and big data UBI services can be expensive, who bears the cost?
- Complexity – ecosystems must satisfy the needs of multiple stakeholders
- Regulation – myriad regulations across municipalities, jurisdictions and agencies
- The rise of UBI in the service economy: UBI seems poised for massive uptake in both emerging and industrialized global markets. Customer enthusiasm for connected vehicle experiences enhancing safety, increasing productivity, and lowering costs, is high in both consumer and commercial segments. With 57% of new cars shipped with embedded connectivity solutions today, projected to increase to 89% by 2024, OEMs are helping the UBI cause.
- Understanding driving behaviors: The connected vehicle market is shifting the focus from vehicle to driver and consequently, from amassing vehicle stats by rote, to a more holistic understanding of driving behavior and how it impacts risk. OEMs are increasingly using event data (sourced from vehicle OBD-II transmitters, electronic logging devices (ELD), and customer smartphones) to fuel a new generation of artificial intelligence (AI), biometric analytics and machine-learning algorithms in an attempt to understand how and why people drive as they do. The ability to analyze and compare driving behaviors is fast becoming a critical success factor for insurance companies, fleet operators, and commercial drivers in the connected vehicle space.
- Challenges in developing sustainable UBI ecosystems: By definition, an ecosystem must meet the needs of diverse stakeholders, at scale, over a longer time horizon. Information must easily and securely traverse the connected fabric of people, systems and things, and function holistically with the larger ecosystem of edge devices, messaging flows and back-office business applications. The challenge becomes clear when attempting to model multipoint stakeholder relationships in the connected vehicle space. Insurers, regulatory agencies, financial clearinghouses, B2B customers and consumers, each bring to the table a multiplicity of complementing or, sometimes, competing interests. This complicates the development of a true enablement platform from which to orchestrate the planning, testing, development, integration and execution of complex workflows, business rules and stakeholder interactions.
The balance of the document explains the advantages of the Covisint UBI platform.
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Digital Insurer's CommentsAs Apple’s Jeff Williams famously said, “The car is the ultimate mobile device.” Will drivers reluctant to share data with insurance companies in exchange for insurance discounts be willing to share with other companies, such as Apple, in exchange for other things, such as in-car entertainment?
The race is on, with OEMs, digital natives, insurers and telematics service providers (TSPs) ramping up efforts for a seat at the table. OEMs sitting on large quantities of connected vehicle data are forging alliances with insurers willing to leverage this data to create significant and sustainable opportunities for growth.
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