Biggest money is on mobile devices to spread UBI

If UBI is the future of car insurance then the mobile telephone will be its sidekick. PTOLEMUS Consulting Group projects that by 2020, 100M cars worldwide will be covered by UBI policies and for this to be a convenient and cost effective transition a mobile seems a far better idea than having to fit a little black box.

“The equipment, a smartphone, is already owned by the consumer so the cost of deploying hardware is less, including no shipping costs,” explains Robin Harbage, director, Towers Watson. “Also consumers are very comfortable with downloading apps onto their phone, so the inconvenience is much less, reducing the friction of the sale and policy on-boarding.”

The fundamental benefits of a smartphone solution benefit both insurer and user, says Blair Currie, vice-president of business development, IMS. “For insurance companies, the main benefits include the ability to secure high quality data at a lower cost and to have more personalised data on the driver versus the vehicle. For the policyholder, there is greater convenience (smartphone apps are easier to install than OBDII devices) and the ability to instantly see results and to tie in more personal information such as the extent that one is distracted by phone use – whether it be hands free or not.”

OBII

As well as securing high quality data at a lower cost, mobile solutions have proved just as reliable as OBDII devices, says Currie. The technology will also react to trips in much shorter timespans, providing live coaching and tips to the driver on driving efficiently, for example, rather than having to view the data on a personal computer. It will also be able to track how distracted the driver gets with the mobile device itself, as Currie explains: “We can see how much a driver will drift or pick up speed every time they access their phones – manually or via Bluetooth. This is critical because it presents a measure of how well or poorly they can multi-task. For using a phone in Bluetooth also increase ‘cognitive load’ and affects driving behaviour. Some people can do this better than others – so smartphone data can help demonstrate an individual’s ability to walk-and-chew-gum at the same time.”

The continued development of smartphone technology will also improve functionality as additions to mobile sensors will allow insurers to identify whether the driver is driving their family car or a sportscar, for example, by analysing the magnetic field via the smartphone magnetometer.

As well as being a familiar interface, the mobile also offers cybersecurity advantages, says Bob Gruszczynski, OBD communication expert, Volkswagen Group of America, because there is no direct connection to the vehicle.

Cross operating platforms

However, there are still challenges to overcome. For starters, not everyone owns a smartphone and, if they do, the connection between driver identity and mobile owner needs to be locked down to avoid misuse. There is also a question mark over the app itself and how it could work across all mobile devices such as Blackberry 10 and not just for Android and iOS. The final challenge is the risk of incomplete data sets caused by, for example, lack of signal or a dead battery but Currie says this hasn’t been an issue so far. “Some of the challenges that we thought would happen do not appear to have materialised.

For example some insurers felt that policyholders would purposefully turn off their phones to not record trips. While there is the possibility that this could be the case, there are actually greater reasons for policyholders to keep the phone always turned on. There is a greater fear of ‘missing out’ than a fear of being punished for, say, speeding.” It seems our modern day addiction to mobiles could fall in the insurer’s favour.

UBI is set to strengthen existing data sets as it compliments existing as well as future telematics systems. All smartphones employ data technology, whereas, many vehicles do not and must use a form of aftermarket device to provide this information, says Gruszczynski. “It’s only a question of accuracy of the technology as applied to in-vehicle use,” he says.

Currie predicts that smartphone GPS will data fuse with underlying road or accelerometer data to provide a more accurate route to the driver. The readings gained from telematics data will also help policyholders as an increasing number of insurers offer breakdown and emergency services. “Smart insurers will use data from the accelerometer to reach out to their policyholders when they believe an accident has occurred,” says Currie. “They will ask ‘Are you okay?’ and ‘Do you need help?’ before talking about ‘Do you want to file a claim?’”

The future of mobile UBI includes V2V communication, sophisticated use of ratings algorithms through better use of telematics data and the opportunity for new products such as driver based insurance and time-based policies. As UBI business models become more sophisticated, the technology will develop as more drivers contribute and should benefit from this new level of consumer engagement.