Hooking consumers up to the benefits of UBI

How UBI can enhance the customer experience, explored by Guy Bird.

The case for UBI stands to reason really: the more information your increasingly-connected car can generate, the more accurate its performance profile and that of its driver will be. This can improve safety and save money, to the collective benefit of carmakers, auto insurers and the end-user.

Joe Griffin, director of sales and delivery, DriveAbility and consulting at Octo breaks it down. “If an OEM can understand the most common wear and tear and the most frequent repairs to their vehicles, they can strengthen those areas and reduce the impact caused by frequent driver habits,” he begins. “For insurers, the constant challenge is to provide the most accurate insurance premiums in order to provide an individualised policy which reflects each customer’s ‘driver DNA’. Telematics use the sensors of a connected car to collect data on how, how much, when and where the vehicle is operated, that can be used to provide a risk score, which is used to calculate significantly more accurate insurance premiums. By providing bigger and regular discounts to safe drivers, insurers can not only provide them with an accurate premium but also encourage good driving behaviour, reducing accidents which benefits everyone.”

However, with so much potential data to mine, at which point do these different interested parties’ priorities diverge on what data is most important? Ben Miners, vice-president of Innovation at IMS, sees some clear differences, according to the stakeholder’s angle: “The most useful information for the insurance company continues to be high-frequency, high-fidelity data collected from on-board sensors to describe vehicle dynamics and driver behaviour, quickly followed by mobile and distracted driving characterisation, all of which is important to describe driving manoeuvres, aggressive tendencies, and other risk factors.”

For the carmaker it’s slightly different. “Vehicle health information is important to the OEM to proactively identify potential anomalies and maintain a good customer relationship,” Miners continues. “The effective communication of both vehicle health and driver behaviour in an engaging manner – such as providing personally-relevant information via upcoming alerts – is important to the vehicle owner so they can make timely, informed decisions about effective vehicle maintenance, travel safety and insurance premiums. Of course, additional weather, traffic and ambient and contextual information is also useful to provide improved accuracy in scoring, feedback, event detection and risk assessment. However, it is not a substitute for core telematics data.”

When it’s good to share

Miners believes there are good logical reasons for customers to share data and for insurers to reward such collaboration with lower premiums, even indirectly. “The majority of vehicle owners are already interested in sharing more data to speed up the claims process, which ultimately improves efficiencies for the insurance carrier resulting in premium adjustments appropriately. Combining connected car data with digital experiences for claims submission and management not only improves safety and reduces overall downtime but it also provides tools to help reduce fraud using objective independent information.”

For Griffin there are benefits well beyond lower premiums too, in taking some of the stress out of accident situations, as he comments: “From a customer perspective, an accident can be a very traumatic event they would like handled with minimal bureaucracy. Using this data, emergency responses can be automatically deployed, damages triaged to make sure the vehicle is rapidly repaired or replaced and liability established without lengthy investigation.”

In terms of how widespread such an approach is in early 2018, there appears to be room for improvement though. “The adoption of automated crash reporting systems is lower than desired today,” says Miners, “with most systems involving a manual triaging or assessment process before emergency response and an optional claims process initiation.” However, Griffin sees automated accident reporting “gathering pace” and reckons it “will be almost commonplace in five years”.

Data privacy issues

Yet what systems are in place to keep these vast new data sets safe and where do insurance companies’ desires to create the most accurate customer profiles clash with their end-users’ rights to privacy? “Customers are increasingly demanding to know exactly how their data is stored and used and insurance consumers are no different,” reasons Griffin. “It is absolutely crucial that any company that stores customer data has comprehensive policies around data handling and this will become even more important when GDPR [general data protection regulation] is implemented in May 2018. There have been some incidents where companies have suggested they will be using social media content to evaluate potential customers’ premiums. However, this does not seem to have been fully implemented and has met with some pushback from customers.”

Indeed, such can be the size of the task that it’s farmed out to companies better used to dealing with it, as Miners concludes: “In many cases OEMs and insurance companies are explicitly selecting technology and data partners that employ a privacy-by-design approach with proven security to deliver connected-car products and services. This approach provides comfort for the OEM, insurance company, or government agency, knowing that the detailed data is being managed by a trusted custodian.”

[Ins.Bird.2017.12.01]