Innovation Key to Ideal Usage Based Insurance Solutions

Today, we bring you a guest post from Gary Wang at Pinnacle Actuarial Resources. As many of you might already know, Driveway and Pinnacle have teamed up to offer the industry a coordinated usage based insurance solution that includes driver behavior scoring.

The question at hand: What would be your ideal UBI solution?

At the 2015 Casualty Actuarial Society Ratemaking and Product Management Seminar, Pinnacle surveyed the attendees on a variety of questions, one of which centered on the topic of usage based insurance: “What would be your ideal UBI solution?”

The surveyed results are as follows:

UBI-Solution

The results were an inspiration to me in a way that tied closely to the theme of the keynote session: Innovation.

It was just a few years ago that installed devices were the clear go-to solution. What I often heard around the industry were the many problems of smartphone based solutions. With OnStar not showing signs of entering the game back then, original equipment manufacturer solutions seemed an interesting but unlikely competing alternative. Had this survey been done at that time, I suspect Installed Devices would have risen to the top.

Driveway, a strategic partner of Pinnacle and developer of a smartphone based UBI application, understood the concerns with a smartphone solution, which included battery drain and incomplete and inaccurate data. In response, they designed an app that addresses many of these concerns, and exemplifies why the scene has changed. Tests conducted show that smartphone UBI data is comparable in quality to UBI data from an on-board diagnostics device, and can be collected without significant battery drain or data plan consumption. Driveway did not attempt to invalidate the concerns but used the concerns to drive innovation.

The driveway is the first app in the auto insurance industry to provide automatic travel discovery. The app does not interfere with the smartphone hardware and does not drain out the battery which was an issue with the previous version of the software. It is a cloud-based software which detects the driver’s current location and other trip details. Click here to know more about Bitcoin Loophole.

Proactive responses like these are why I believe the app-based solution has become a top contender in the UBI arena. Will they be the ultimate solution? That remains to be seen. OnStar finally got on board this year, partnering with Progressive’s Snapshot® program to provide driving data beyond mileage driven. Progressive has also expanded options with Zubie, again utilizing a device in the on-board diagnostics port but passing the feedback information directly to the driver’s mobile device.

What will the ultimate solution be? That remains to be seen. However, whatever the final form may be, the insurance industry will have a key role to play. The answers will ultimately be used by insurers, and as a result, insurers must be proactive in continuing the dialogue to help define the best portal for data gathering and challenge the innovators to devise solutions that exceed user expectations.