How Auto Insurers Can Capture the Booming Senior Market with UBI

Mileage and claims. There’s a big correlation between the two, as any insurer knows. Yet the standard pricing model barely distinguishes between drivers who log only 5,000 miles a year and those who log 20,000, said Becky Yerak of the Chicago Tribune.

That’s a problem for anyone who drivers fewer miles than most – particularly seniors.

Older drivers … a menace behind the wheel? Not so much.

It’s not uncommon to imagine seniors as a menace behind the wheel, but the numbers don’t necessarily support that bad rap. As pointed out in our last article, studies have shown that senior drivers have fewer crashes and are less likely to be injured or killed than middle-aged drivers ages 35-54, because:

1) Seniors drive less often and for shorter distances

2) Seniors tend to avoid inclement weather conditions and night driving

3) Seniors tend to self-limit their driving if they experience limitations in their health or vision

4) Seniors are the most experienced drivers, making them safer on the road than younger drivers

Sometimes insurers offer seniors an age-based discount. But we think they can do better.

We think seniors deserve premiums that are based on their safety records.

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When the Consumer Federation of America shopped insurance for a hypothetical 30-year-old woman, they found that astonishingly, Farmers, Progressive and Allstate offered her the same annual premium whether she drove 5,000 or 20,000 miles a year.

Compare that to usage based insurance pricing, which rewards low-mileage drivers with what can amount to “hefty” discounts, said Mark Williams, a Columbus Dispatch contributor. While “most participants will see discounts of 10 to 15 percent,” those who drive relatively little could save 30 percent, even as much as 50 percent.

That’s great news for seniors, who, according to the Federal Highway Administration, drive an annual average of only 7,646 miles.

Offer a more competitive package to an ever-expanding customer base.

It’s no secret that the elder population is growing. The “90-and-older population nearly tripled” since 1980, “reaching 1.9 million in 2010,” said the U.S. Census Bureau. By 2030, we expect over 57 million to celebrate their 70th birthday, adding up to “30 percent more drivers aged 70 and older on our roadways.”

Insurers offering UBI-based discounts can give this customer base a much more competitive premium than those using the standard pricing model. It’s only a matter of time before the older population takes it for granted that UBI is simply a better deal, given their needs.

Bottom line, with usage based insurance you can position yourself to make a much better offer to a market whose numbers are constantly on the rise. Reward older drivers for their low annual mileage, and tap into a demographic whose track record is among the best.

Auto Insurance Digitization: Is Your Company Behind the Times?

It’s no secret that digitization brings the potential to transform the auto insurance industry from the ground up. For one thing, it can expand an insurer’s service offerings. According to the Bain brief, “For insurance companies, the day of digital reckoning” some carriers are leveraging mobile apps to let their customers add a vehicle, get a quote, file a claim or pay bills.

When an insurer manages to “integrate disparate channels into a seamless experience,” as Bain said, it clearly benefits the customer. But it also benefits the company.

How digitization can optimize your business processes

Cognizant, a company specializing in business optimization, keyed into telematics as a major opportunity to boost efficiencies in auto insurance. In their words, usage based insurance is “laying the foundation for better decisions and core business process optimization.”

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How? When an insurer integrates telematics into its core systems, including “policy administration, actuarial and underwriting, billing and claims, as well as new action-oriented policyholder portals,” it can achieve “more predictive and faster decisions … perhaps even in real time.” Meanwhile, manual work and time-intensive tasks “can be streamlined or eliminated as processes are automated with accurate geo-spatial and vehicle data.”

The result, Cognizant said, is a “noticeable impact on loss ratios,” with additional, quantifiable savings continuing to roll in, as insurers continue to collect and analyze UBI data.

Why are auto insurers falling behind?

Digitization isn’t just creating new efficiencies for auto insurers. It’s transforming business processes for industries across the board, from healthcare to finance. But as the news site Shanghai Daily pointed out last month, while “the financial sector is racing to embrace digital technology to boost sales and drive profits, the traditionally staid insurance industry is in danger of falling behind.”

If you were to rate your company on a scale of one to 10, how fully have you leveraged mobile technology to optimize your business processes?

Two benefits: business efficiencies, customer retention

Usage based insurance doesn’t just bring the potential to improve efficiencies; it can also improve customer retention – which stems in part from lower premiums, as well as a closer customer relationship. “That’s the Holy Grail for insurers,” Deloitte University Press said, “establishing brand stickiness by offering ongoing value to policyholders beyond the price charged for coverage and claim service provided.”

The other side of the retention coin is, interestingly enough, inconvenience. When a customer would have to cancel online bill-pay for their insurance provider and then set it up all over again with a new organization, for example, it could deter them from switching carriers in the first place, unless they were seriously disgruntled.

Bottom line, “most executives recognize that they’re on the threshold of a once-in-a-generation opportunity to both reduce costs and foster new streams of profitable revenue growth,” Bain said, speaking of digitization. And UBI telematics is a central component of that opportunity.

Auto Insurers: Are You Customer Acquirers or Customer Retainers?

As auto insurance companies go, which are you: A customer acquirer, or a customer retainer?

Perhaps you’d like to say you’re both. According to Bain & Company, though, that’s unlikely. Last summer, Bain conducted surveys including almost 3,600 auto insurance consumers among its respondents, which showed “that it’s very difficult for a carrier to excel in both endeavors.”

The good news is that the auto insurance industry is generally pretty good at holding onto its customers, with U.S. retention rates averaging 90 percent. But there is a flip side: Those customers who are shopping, are serious about it.

So said Jeremy Bowler, senior director of the global insurance practice at J.D. Power, after the study his company conducted in 2013. To put it bluntly, of the 23 percent of customers who shopped auto insurance in the previous 12 months, 45 percent made a switch. That’s “the highest rate since the study first began measuring insurance customer retention in 2008.”

Which brings us to that perennial question: How can you keep the customers you have?

Price shopping versus experience-shopping

The answer boils down to what customers want. Customers aren’t just price-shopping these days; they’re experience-shopping. When given the option for a better customer experience, most customers – 81 percent, a 2012 Oracle study said – are actually willing to pay more.

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It seems that personalization is a big part of what they’re looking for. When Accenture conducted a similar study in 2014, it found that 54 percent of younger customers (aged 18 to 24) and 52 percent of slightly older customers (aged 25 to 34) said they’d go with a higher-dollar plan if it offered personalized service.

Personalization through technology

How to achieve a superior customer experience through personalized service? Smartphone apps present one answer. In an era when most smartphone users confess to keeping their phones on or near their person 24 hours a day, the options for providing personalized, experience-driven service have expanded. “Mobility and the cloud have created ultimate anytime, anywhere experience for consumers,” Property Casualty 360 observed.

Leveraging this technology to deliver a sleeker experience, while communicating with customers more clearly and more frequently at the same time, is an excellent start. It also blends very well with another important component of customer retention in today’s auto insurance industry: Insurance telematics.

How big has insurance telematics gotten? Deloitte University Press put it this way: “Carriers that choose not to go the UBI route will likely have to formulate and execute an alternative retention and growth strategy, if only to ward off the competitive threat posed by those employing telematics.”

Want to become an auto insurer that excels in both customer acquisition and customer retention? The key is using technology to deliver a superior, more personalized experience. How? Mobile usage based insurance.

Usage Based Insurance Helps New Drivers Avoid 40% of Crashes

There’s some interesting new research out from UK-based auto insurer, ingenie. Their Young Driver’s Report revealed that 40 percent of new driver crashes could be avoided with wider adoption of “blackbox” or usage based insurance.

While the infographic below fully illustrates the company’s findings, here are a few highlights:

One in five young drivers crash within their first six months on the road.
More than 90% of those using usage based insurance, engage with driving behavior feedback and check their feedback 14 times a month, on average.
Young drivers who share driving feedback with their parents or guardians are 28% less likely to crash than those who don’t.
Drivers with higher driving scores are less likely to have serious crashes than those with lower scores.
With ingenie’s usage based insurance program, one in eight drivers crash within their first six months on the road (compared to the usual one in five).

It makes sense that coaching teen drivers should improve their safety and ability to avoid accidents, and now ingenie has the numbers to prove it! In addition, we know that young drivers are digitally engaged, and therefore highly likely to embrace smartphone UBI.

American auto insurers – now is the time to take action. If you haven’t already done so, read this article on how to feed the usage based insurance elephant.

Wondering how to accelerate auto insurance profit potential?

Many auto insurers still think that usage based insurance programs have to be bogged down by hardware, inventory and seven-figure budgets. If you fall into this category, don’t wait another minute to download the Driveway Fact Sheet. Whatever you do, DO NOT sign a usage based insurance contract until you’re apprised of the newest technology available. Complete the form to the right to get the information you need, before it’s too late!

 

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Payment is certain and is made to sellers by means of automated methods:  

  • Such a credit or LC payment method can surely tackle the business risks associated via bank facilitation especially related to trade flow and its settlement scheme. It is definite that the trade value can be seriously limited by the financial institutions for the high costs, system complexities, and delays in the contractual period.  

 

  • Since the letters of credit or LC is determined based on trade documents and never on the quality or delivery of goods, the legal phrases linked with the LC makes the banks to take appropriate determination while interpreting them. Thus, any kind of errors with requirement interpretations or terminology lead to fights between those respective teams and the traded goods are left unwanted at the delivery location. 

 

  • Another condition of concern is when the payments get delayed when data mismatches occur between the LC contract and its underlying trade files, or which need an acceptance sign form the buyer. Problems can also arise if any kind of corrections is made with the concerned LC contact amendments within a short period before its expiration period. 

 

All these difficulties are easily mitigated including the risk of denied or delayed payments by correctly modeling the LC contracts as naturally executing types and is made to act on blockchain technology. Now you can see the advantageous working processes of automated verification with the concerned contract’s terms and conditions thereby ensuring the timely payment to sellers preventing any kind of disputes arising due to differences in payment contracts. 

 

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UBI is no longer an interesting experiment. In fact, it’s the key to winning … but only if you do it the SMART way.

The Unbanked – a Good Fit for Usage Based Insurance?

It’s easy to assume that pretty much everyone has a bank account. After all, it kind of boggles the mind, imagining what it would be like to get by without one.

Still, 10 percent of America is “unbanked” meaning that they are individuals who don’t use banks at all. In addition, another 17 percent are considered underbanked, which means, according to PBS, that “they use a bank account in addition to an alternative financial service like payday lenders or payroll cards.”

A marginal slice of the population? Not really: we’re talking 27% of the nation.

To make things more interesting, those un- and underbanked individuals are smartphone users.

Among the unbanked, 70 percent use smartphones
Among the underbanked, 40 percent use smartphones

Occasionally these bank-averse individuals do open an account, and when they do, statistics show they have an overwhelming preference for mobile banking. That’s true among regardless of income level. And while later they may choose to close the bank account, the phone remains an important fixture in their lives. Bank accounts may come and go, but smartphones are forever.

Does usage based insurance appeal to the unbanked?

If you’ve never opened a bank account, you probably don’t have a credit score. And when you don’t have a credit score, it’s tough to get car insurance. Some insurers may shut the door on you entirely. Others may require you to pay higher premiums. Here’s where UBI could present an interesting solution.

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Anyone who’s already using a personal device on a daily basis is probably willing to consider getting auto insurance via a smartphone app. The un- and underbanked demographic, in particular, is even more likely, given their preference for mobile banking.

Usage based insurance eliminates the need for insurers to factor in a driver’s credit score when setting their rates. By basing the cost of insurance on a driver’s behavior, usage based insurance sidesteps the need for credit data.

This means that providers who offer UBI-based insurance without requiring credit data have a competitive advantage when appealing to un- and underbanked customers, because they can offer them more competitive rates. That’s a significant advantage as we’re talking about 27 percent of the population.

This is just one more way usage based insurance could transform the face of car insurance. Click here to see how usage based insurance could revolutionize your approach to insurance.

10 reasons to UNPLUG and unburden UBI

Until now, UBI programs have been burdened by costly OBD devices, complex rollouts and seven-figure budgets. Add that to the fact that consumers don’t like crawling under their dashes and going to their mechanics for OBD electrical system interference, and it’s easy to see why the traditional Usage Based Insurance formula needs some tweaking.

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The Blazing Trader review describes its intimate dependence on the blockchain technology which is its underlying working principle. In fact, this technology provides the complete assurance in terms of timely delivery and payment to its traders or buyers through the process of the trade asset tokenization. 

  • A buyer should be able to transparently view all the present and possible status of the in-transit shipment to obtain the timely indication of all possible delays and damages that negatively affect the fulfillment of downstream obligations.  

 

Mostly, the insight is often lacked into route delays and delivery damages occurring due to weather conditions, customs holding or congestion in certain areas. This further limit the foreseeing capacity and there exists no way to tackle the associated business risk. 

 

  • There are also chances of the trade documents moving separately from the good flows and there seems no interconnection between the two. This creates situations that these traded goods can either be claimed by the customers or can hold to it anymore. Further, this condition prevails until the physical documents or the title is attained back.  

 

Moreover, there can also be chances of mitigating or manipulating the documents that can lead to misleading in the transport chain and further resulting in the fragmented interactions between its stakeholders and so. There can be vulnerabilities and variations within the country’s regulation status for trading procedures and overall it can lack the essence of standards and security. Such a condition can increase the risk of fraud documentation for the trading parties. 

By employing blockchain, the traded asset can be digitized through crypto-tokens and tagged with the ownership of the bearer and avoiding all kind of confusions that otherwise arise. 

First of all, we think that the complicated and complex method implemented into this system’s functionality is fake and unreal as the only purpose of the two men obviously is to make people believe the software is something amazing and unheard of. Secondly, there is nothing to prove that this trading algorithm really works properly. 

Fortunately, Driveway offers a simpler, far superior mobile alternative.

Download our free report now to discover:

Underlying issues with the OBD device and the CAN-bus it plugs into
How OBD and Mobile UBI stack up in 10 key areas
3 early mobile challenges and how Driveway overcomes them

Don’t wait another moment to complete the form to the right. This information could save your UBI program launch hundreds of thousands of dollars!

How does Driveway power usage based insurance?

Driveway is a robust, smartphone-deployed, cloud-based technology that provides auto insurers with comprehensive insured driving data for better pricing intelligence – maximizing the opportunity for lower loss ratios and higher profits. While the technology sets new performance standards in the Usage Based Insurance arena, affordability, scalability and ease of rollout are the head-turning features that position you for cost-effective speed to market. Ask us how we can deliver a custom solution for your company.

Get acquainted with Driveway – the smartphone UBI leader

Based in the Silicon Valley, Driveway Software, Inc., provides smartphone-based telematics solutions for the usage-based insurance industry. We put insurance carriers in the UBI driver’s seat by delivering a turnkey, end-to-end, smartphone UBI platform that leverages mobile and cloud technologies.

The blockchain technology which the Tesler App effectively adopted had a wide application in future progress even though they had to face critical challenges in the initial process like collaborating and managing the operational complexity of the industry-wide trading network. This distributed ledger has a variety of applications that require careful strategic considerations and design decisions for production deployment. 

The Driveway smartphone UBI solution was developed with both the insurer and consumer in mind. Consumers are willing, now more than ever, to let insurers monitor their driving habits in exchange for premium discounts. Most importantly, our philosophy and charter is to deliver UBI within a cost-effective framework that is easy to deploy, scale and manage.

The Driveway team brings some of the best and brightest minds in the industry together. Our technology is now six years in its development lifecycle, designed by a top tier product team with solid experience in UBI, telematics and consumer focused user interfaces (UX). Test drive our smartphone UBI solution. You’ll be glad you did!

Meet Driveway co-founders, Jake Diner and Igor Katsman
Jake Diner
CEO

Jake Diner is the CEO of Driveway Software. Jake’s charter is to drive the overall company strategy and direction which includes business, technical and sales operations. Jake is highly skilled and experienced in software development, business development, strategic partnerships and project management.

Prior to Driveway Software, Jake had 11 years of experience as a global product manager and a product engineering manager for two large international companies.

Jake holds a Bachelor of Science degree in computer engineering from Michigan State University in East Lansing, MI where he also starred on the university’s track and field team in the pole vault competition.
Igor Katsman
CTO

Igor Katsman is the CTO of Driveway Software. Igor’s primary focus is on the development and refinement of Driveway’s smartphone UBI platform. He is responsible for hiring top tier technical talent, establishing multiple strategic partnerships, and building ongoing client relationships.

Prior to Driveway, Igor worked for more than 20 years as a senior executive with global, middle market and start-up firms.

Igor has authored 16 patents and scientific publications. Igor earned his Master Degree in Computer Sciences from the Technion University in Haifa Israel and holds an Executive MBA from the Kellogg School of Management at Northwestern University in Chicago.

How the Driveway UBI smartphone app works for drivers

What do insured drivers want? Affordable rates, an insurance partner they can trust and help with avoiding accidents. In the past, you might have been challenged to deliver all three. Not anymore. Yes – you can give your auto insurance customers ALL these advantages and more with the Driveway UBI smartphone app.

Affordable rates. The whole point of usage based insurance should be to teach policyholders to become better drivers and then reward them with lower rates when their driving improves. Finally with Driveway, you can do just that. Don’t let your best drivers be cannibalized by your competitors with UBI programs.

Trusted insurance partner. With the Driveway UBI smartphone app, your policyholders know what you’re measuring. Plus, they receive immediate performance feedback in a fun, non-threatening format. In an age when consumers demand transparency, don’t let a “black box” create a serious trust issue.

Help with avoiding accidents. Drivers don’t want to hassle with accidents and claims – and they surely don’t want to place loved ones at risk. Now, you can help them avoid all that, and save money too – all while improving your own profitability.