Telematics Insurance Solutions – What’s Your Strategy?
Katey Walker

Telematics Insurance Solutions – What’s Your Strategy?

Recent survey sheds light on consumer acceptance

Usage Based Insurance (UBI) has become a fixed presence in the insurance landscape. The recent Telematics US conference showcased a lot of new technological solutions with both personal and commercial vehicle applications. With all of the available options, the challenge insurers will face is to select the right program that aligns with their business strategy.

UBI programs are available in every state in the United States. Ohio and Illinois have been particularly receptive to the inclusion of telematics and provide the largest number of available options.

Insurers still face significant challenges in implementing telematics programs including expense considerations, data gathering and processing, agent and customer acceptance, selection of appropriate technology, and alignment of their own value propositions. Often seen solely as a discount mechanism, UBI as a service or value-added mechanism is an important part of some programs.

Pinnacle’s survey of attendees at the recent Telematics US conference showed significant concerns about consumer acceptance of UBI:
Although the acceptance of UBI has been growing among agents and customers there still is a notable level of general misunderstanding. For customer utilization to increase significantly, insurers must address these concerns and work to educate, and hopefully change consumer perception of UBI.

The collection and processing of data are key to the core intention of any UBI program. Discount programs rely heavily on identifying and acknowledging driving incidents; yet, a program focused on teen safety, mileage verification, or concierge services would require a different level of monitoring and perhaps a different set of data points.

Survey respondents identified acceleration and braking characteristics as the most relevant UBI data to collect. Mileage, speed, and date/time of the trip were also popular choices.
The technology solution must also be chosen accordingly. The latest technology initiatives focus on incorporating smartphones, decreasing expenses and maintenance, and creating customer-focused dashboards to promote acceptance. The gamification aspect of smartphone applications continues to grow and gain popularity with younger drivers. However, the use of on-board devices is still the main solution currently in use in the market.

UBI strategy has evolved beyond the selection of devices. Insurers and vendors are moving quickly to keep up with the changing landscape. The most successful companies will incorporate UBI into their value proposition and create a data, technology, and analytics plan that supports that proposition.
  
Kwalker@pinnacleactuaries.com

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