In the Portland area, three teen drivers were recently killed in motor vehicle accidents, all in the timeframe of one weekend. These deaths have sparked a conversation among Oregon policymakers about teen driving.
The existing rule requires teens to go through an extended period of supervised driving before they’re fully licensed. For eight years after it was introduced, the policy brought teen crashes down by almost 30 percent. Now, however, it seems to have “reached the limits of its ability to reduce serious crashes on the roads,” Troy Costales of ODOT said.
What’s being done about it?
Legislators are talking about toughening the guidelines on when teens are allowed to have other teenagers in the car. According to a AAA study, the risk inflates by about 44 percent when a teen is driving with one other person under 21 years old. With two under-age passengers, it doubles. With three or more, it more than quadruples.
Even without any passengers, the risk is high to begin with. The ODOT teen driving manual says that for drivers age 20 and under, the crash rate has been twice as high as for the general population. “Teens have the highest crash rate of any group in the United States,” AAA said.
What else can policymakers do? Costales said they’re thinking about upping the minimum driving age to 17 or 18, or possibly restricting the driving hours for teens even further – although these ideas won’t work if they create a hardship for Oregon’s rural communities.
Can UBI driver coaching help?
While in this example, the teen driving accidents took place in Oregon, these kinds of tragedies occur throughout the nation, every day.
Maybe one aspect of the answer is already in most teens’ pockets. Smartphone telematics apps reward good driving with an insurance discount, offering drivers an incentive to improve their skills. For teens, that’s probably not much of a motivation if their parents are footing the insurance bill. However, gamification is.
If the smartphone UBI app features real-time driving data calculation, teens can receive feedback on their driving at the conclusion of every trip. When your smartphone detects every time you brake or corner too hard, and when you know you can improve your score with every incident-free trip, suddenly following the rules becomes fun. Immediate feedback makes learning easier. And when the game is safety, everyone wins.
To learn more about improving safety for teens on the road, take a look at Impact Teen Drivers: a national nonprofit founded by the mother of a teen who died in a crash.
To learn more about adding smartphone UBI to your product line up, download our OBD v. Smartphone UBI Comparison Report.
Bloomberg Business reports that Progressive Corp. will begin increasing rates for some risky customers enrolled in its Snapshot program. Click to read the full article.
Why does this matter to auto insurers? Here are three key takeaways:
- Up until now, usage based insurance (UBI) has been focused on giving discounts. Now, UBI has evolved to delivering rates based on true risk assessment.
- Companies that offer usage based insurance are not only attracting the safest drivers; now they’re also pushing away those whose driving behaviors are not safe, by charging them more.
- Companies that offer usage based insurance can compete with the confidence of knowing that they’re charging adequate rates for the risks insured. Do you have that same confidence?
The article also reported that Progressive’s Snapshot program sales grew by 28 percent in 2014!
Would you like the opportunity to try this for yourself? Ask us how to take usage based insurance for a test drive. Use the Driveway smartphone UBI app to monitor your own driving behavior and then see your results from the insurer-view by taking a sneak peek at data collected and stored in the cloud. Email us today to get started.
Also, check out the infographic below to get a sampling of the types of data you’ll have at your fingertips if you deploy smartphone UBI:
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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.
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.
Interested? Ask us about our UBI pilot programs.
No matter how you slice it, usage-based insurance brings plenty of good things — from helping to make the roads a safer place, to reducing fraud and strengthening customer loyalty. That said, not all usage based insurance technology is created equal. Programs that calculate driver scores in real time stand above the rest for the two key reasons discussed below.
1. Immediate feedback makes a difference.
It’s one thing to base your customers’ rates on their behavior. It’s quite another to communicate with your customers frequently enough to help them actually improve their driving … offering feedback that’s useful to them in the moment, not just at the end of the billing cycle.
In fact, we’d go so far as to say that when you’re setting up your usage based insurance program, you should make real-time feedback a non-negotiable. And, to provide instant coaching, you need usage based insurance technology that calculates scores on drivers’ smartphones in real time.
Why is real-time feedback important? The simple answer is, it works. On a human level, when feedback comes after a long delay, it’s much harder to respond to it. But when feedback is immediate? It’s easier to connect input to behavior. A teachable moment is just that: a moment.
In fact, the question of when and how to offer feedback has been well-researched in classroom settings. “Numerous studies indicate that feedback is most effective when it is given immediately, rather than a few days, weeks, or months down the line,” said Edutopia, for example – a fact that’s no less true in the classroom than it is behind the wheel.
A case study by The Hartford offers further evidence of the benefits of immediate feedback. By providing in-vehicle telematics that give drivers immediate feedback on risky maneuvers, a regional beverage distributor was able to reduce risky driving behavior by 75 percent in a one-year timeframe. This led to a fuel savings of almost $300 per vehicle annually, and accidents were reduced by 31 percent, with a 74 percent reduction in accident-related costs! Can you imagine the impact on your bottom line if your book of business experiences similar results?
2. Real-time calculations also lighten the burden of data processing and storage.
There’s another reason to prioritize real-time calculations, and that’s the data. By calculating driving events in real time, you minimize the amount of data that your UBI app is required to log, store and upload.
UBI apps that don’t offer real-time calculations have to hold onto large chunks of data until the end of the trip, when they can upload everything to the cloud. That upload can amount to 20 megabytes or more, depending on how long the drive has been. It places a heavy load on local temporary storage; it also reduces the battery life on your customers’ phones.
In contrast, apps that calculate and analyze vast majority of events and scores in real time upload kilobytes, not megabytes.
The bottom line:
Apps with real-time driving data calculation offer a leaner, more efficient way to process data — while also delivering a sleeker customer experience. Real-time feedback is also a more effective way to help your customers become safer on the road, improving the driving quality throughout your book of business.
Where can you find a UBI app that calculates driving data in real time on the smartphone? At Driveway Software of course. Download our Fact Sheet to learn more.
In our last article, we shared how you can help your customers avoid the insurance rate hikes that come from committing moving violations. In the “max happiness” scenario, drivers with usage based insurance not only pay the rate that reflects their real behavior; they’re also incentivized to keep those rates low by building better daily driving habits in the first place.
As it turns out, the same goes for claims.
Drivers: you should probably sit down for this
Making an auto insurance claim is no small thing. Forbes called the ultimate cost of that phone call staggering. “Filing a single claim of $2,000 or more will cause an average motorist’s car insurance premiums to skyrocket by 41 percent, according to a recent study conducted for the website InsuranceQuotes.com,” Forbes Contributor Jim Gorzelany said this January.
It’s a touchy topic for your customers. Think about it. They’ve been dutifully paying their premium every month for just this contingency. They didn’t purchase insurance only because it’s required by law; more importantly, they bought it because they wanted someone to be there for them when they needed help.
You don’t want them to regret it. You want them to walk away from the scene of an accident feeling taken care of, not punished. One way to give them that feeling is to demonstrate that you’re on their side from the start by collaborating with them to keep them out of trouble, by providing the tools they need to keep their costs down.
How usage based insurance can combat claims-related rate increases
Forbes said that on average, a driver who files a claim can expect to pay $335 more for insurance per year: “This is all based on the actuarial premise that someone filing an insurance claim is more likely to get into another accident than a policyholder who’s never opened the umbrella of coverage, so to speak.”
Get in a second accident, and watch out! The average rate hike for that is 93 percent.
Usage based insurance could work differently for your customers in claim scenarios in two ways. First of all, it gives you objective data that can be used to evaluate rate increases. Instead of hiking their rates solely based on a claim occurrence, you have other information on which to base an informed pricing decision. Years of good driving don’t have to count for nothing when an accident happens. The old way of hiking rates after every accident may not be the best way, particularly considering recent studies that indicate customers are highly likely to change carriers after filing a claim. If a carrier chooses to do so, it could feasibly offset the rate hike triggered by an accident with good driving habits that UBI customers have demonstrated.
Which brings us to the second way usage based insurance is different: Once again, it incentivizes good behavior, giving drivers a daily reason to make better, more conscientious choices while they’re on the road. Those good habits lower the risk of getting into an accident in the first place.
That’s good news for your customers as well as for your business. Having fewer claims to deal with makes everyone’s life easier – and less expensive. Want to know more? Download our free report: “10 Reasons to Unplug and Unburden UBI.”
When drivers get tickets, their car insurance gets more expensive. No surprise there – traffic violations bear an impact on insurance rates, as just about every driver knows. However, what might surprise your customers is just how much a single violation can affect how much they pay.
How much damage can a traffic violation do?
We’ve posted a revealing infographic from The Hartford below to answer that question. But before you peek, let’s test your knowledge. Of the following infractions, can you guess which is harder on a driver’s pocketbook?
- Which is worse: tailgating or failing to yield?
- Which costs more: driving without a license or driving without insurance?
- Which tops the list: reckless driving or DUI?
Ready for the answers?
- Tailgating is worse than failing to yield, with an associated rate increase of 13 percent – versus only 9 percent for shouldering your way past a yield sign.
- Driving without a license is more expensive in the long run, raising you’re a policyholder’s insurance rate by 18 percent. Driving without insurance? That comes with a rate penalty of only 6 percent.
- It’s bad news for reckless drivers. It turns out that one instance of reckless driving could raise a driver’s premium by 22 percent, which is actually higher than for DUI, which amounts to a 19 percent hike.
Short-term caution vs. lasting happiness
If you tell your policyholders how violations impact their rates, they may drive more cautiously – at least for a little while. It’s one thing to mean to be more cautious, though, and another thing to follow through and permanently change driving behavior. No one knows when they’re going to get ticketed. If they did, they would modify their behavior in the moment to avoid it. Most often, drivers don’t get ticketed for fluke choices. Rather, the tickets they get are often a reflection of their everyday driving habits.
So, if you want your policyholders to experience true driving Zen, introduce them to usage based insurance. Once they realize that their rates will be based on daily driving habits, they will have the incentive they need to behave better, every day. That brings down the risk of getting ticketed in the first place, empowering policyholders to keep their premiums where they want them: nice and low.
Sure, anyone can set out to “drive better.” But for most people daily monitoring, coaching and repetition is needed to achieve a lasting improvement. Usage based insurance gives drivers the tools to drive better and insure happier. Stay tuned for part two of this series … we’re talking claims.
A 2014 survey by Accenture suggests that digital startups related to the insurance industry are prime takeover targets by carriers, and in fact, this type of acquisition is emerging as a key strategy for insurance carriers to jump-start their digital capabilities, Insurance & Technology reports.
This news might be surprising given that insurance is a conservative industry, not generally known for innovation. In the words of one article by Deloitte University Press, “… there are those who would argue that the link between insurance and innovation is so tenuous as to be nearly nonexistent. In the words of the old cliché, innovation and insurance are only found together in the dictionary.” However, despite these stereotypes the same article goes on to prove that innovation has always been crucial to success within the industry.
That’s true now more than ever, as businesses seeking to deliver new value by harnessing digital technology – Accenture calls them “digital transformers” – small companies with big ideas to help them unlock the potential for digital. This is an area where, historically, insurers have been weak. “Only 22% [of C-level insurance execs] said investments made by their organization are focused on driving truly disruptive innovations,” Insurance & Technology reports.
How can a smaller insurer go digital without breaking the bank? By deploying insurance telematics.
Speaking of truly disruptive innovations, usage-based insurance brings “the potential to upend the stable model that has dominated the industry for more than 50 years,” according to a white paper by A.T. Kearney, entitled, “Telematics the Game Changer – Reinventing Auto Insurance.” Here’s how:
- It reinforces relationships with customers, enhancing retention. Drivers who get usage based insurance through smartphones, for example, enjoy frequent touch-points with their providers, strengthening their relationship to the brand.
- It makes claims processing more efficient. With a smartphone at the scene, drivers can begin the claims process more quickly by contacting their provider without delay; they can also take photos of any damage.
- It builds a better profit model. Ultimately, usage based insurance improves a company’s profitability, as better drivers self-select for this type of insurance. And, with built-in incentives, it can improve driver behavior over time.
Digital innovation not only sets a trend for the industry, but protects your company’s position within it. With a profitable business, greater efficiency, minimized claims and a strategy for retaining your best customers, your organization can be disruptive in the best possible way.
Usage-based insurance is just one example of the innovation you need for survival at a time when big companies are looking to acquire smaller ones. Put usage based insurance at the core of your strategy, and take advantage of the benefits it brings. To learn more about our UBI pilot program, available to select insurers, contact us.
As reported by the Insurance Institute for Highway Safety, the U.S. Census Bureau predicts there will be 57.7 million adults reaching age 70 by the year 2030, more than double the 23 million recorded in 2012. Baby boomers are continuing to live and drive longer than ever before. This translates into 30 percent more drivers aged 70 and older on our roadways and the number keeps rising.
Some states are concerned that more senior drivers will equal more traffic fatalities and accidents and are creating plans to address the driving issues of our aging population. National Highway Traffic Safety Administration five-year plan includes addressing roadways and driving license restrictions.
Surprisingly, it turns out that senior driving practices are not as risky as previously believed and, in fact, some major insurance carriers even offer premium discounts to seniors. Another Insurance Institute for Highway Safety’s report in 2014 indicated that senior drivers have fewer crashes and are less likely to be injured or killed than middle-aged drivers ages 35-54 for the following reasons:
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
Adult Children Concerned About Senior Parents Driving
Among adults whose parents are senior drivers, more than 55 percent are anxious about their parents driving habits and safety on the road. Seniors themselves are concerned about their capacity, although they want to continue driving well into their 80s. Quality of vision or hearing, impairment by medications and certain diseases such as diabetes or arthritis, memory loss, and reflex response time are all factors.
According to Liberty Mutual, seniors are willing to have “the talk” about their driving competence with their families but the discussion actually takes place only about 23 percent of the time. USAToday
The Center for Disease Control and the National Highway Traffic Safety Administration are addressing concerns about traffic safety through public education and outreach. AAA provides no-cost driver self-evaluations to help seniors identify and remedy any areas of concern and identify risk factors before there is an accident. Rather than give up the keys entirely, these programs are designed to help seniors and their families make good decisions about when it’s time to stop driving. Studies indicate that age is not the factor which should determine when an individual should stop driving. Multiple factors must be evaluated on a case-by-case basis, including vision, cognition, fitness level, strength and the impact of diseases and/or medications on driving capacity.
Senior Drivers Are a Virtually Untapped Market
Since the majority of current UBI insureds are under 34 years old, auto insurance carriers have a unique opportunity to tap into a new market segment by pushing the benefits of usage based insurance to seniors and their adult children.
User Based Insurance data would help seniors accomplish the following:
• Study driving habits to identify trouble spots and map out alternate routes that minimize risk
• Provide “proof” of safe driving habits and patterns, alleviating concerns
• Alert seniors and their families if their driving is putting themselves and/or others at risk
• Open a conversation between seniors and their adult children about driving readiness
• Raise awareness for seniors about their driving strengths as well as their risky habits
Making seniors safer drivers not only improves public safety and their quality of life, it reduces their liability as insureds, an attractive bonus to carriers. There are potentially 23 million more drivers that will need to be insured during the next 15 years, making them a great potential market for usage based insurance. Want to learn more? Download our smartphone UBI vs. OBD UBI comparison sheet.
Today, we bring you a guest post from Roosevelt Mosley at Pinnacle Actuarial Resources. As many of you might have seen in our recent press release, we recently joined forces with Pinnacle to offer auto insurers more comprehensive usage based insurance services.
Usage Based Insurance Continues Steady Growth
Usage based insurance (UBI) is not only firmly established in the private passenger automobile insurance market, but is gaining market share and is here to stay. Many of the major insurance companies have launched a UBI program, and dozens of other companies are in various stages of strategy development, research, pilot programs and roll-out. Latest estimates place the market share of customers in a UBI program at 10%. Given the number of programs currently available, and those still in development, the number of UBI programs offered to consumers will grow quickly.
With this sudden and significant shift toward UBI in the auto insurance marketplace, it will become increasingly important for companies to determine their UBI strategy. Pinnacle Actuarial Resources, Inc. recently announced a business alliance with Driveway Software, to offer UBI analytics and driver behavior scoring for insurance companies.
Pinnacle’s relationship with Driveway will provide assistance to insurers developing a UBI strategy in several ways.
- With over 500 million miles of collected driver behavior data from Driveway’s smartphone app, Pinnacle will be able to develop driver behavior scores that can be used by insurers who want to launch a UBI product but do not have data to develop driver scores and associated rates. These scores will be easily customizable to insurer specifications.
- Pinnacle’s analytics and insurance expertise will help companies translate the driving behavior data into appropriate discounts.
- Combining the driving scores with our extensive customer research will help companies in the development of a strategy that can be employed for increasing the likelihood of success upon launch.
- Partnering with Driveway provides customers with an option for launching a UBI program in less time and at a lower cost than has been possible in the past.
UBI is here to stay, and Pinnacle is excited to be able to offer these services to our customers to help them take advantage of all the benefits a UBI program can bring. If you are interested in discussing UBI services, please contact Roosevelt Mosley at [email protected].
With Valentine’s Day around the corner, there’s never been a better time to talk LOVE … in this case, our love affair with electronic devices and apps. While we all know Americans are obsessed with their smartphones, the latest data is juicier than an episode of “The Bachelor.”
Check out these sizzling trends …
- Hotter than husbands? According to January 2014, Pew Research, 44% of cell owners sleep with their phones by their beds and 29% describe their cell phone relationships as “something they can’t imagine living without.”
- Trading up? In 2014, for the first time, people began to spend more time in smartphone apps than watching television! Yes, you heard right. There was a 9.3 percent rise in just nine months. This is a continuing trend, as mobile web usage has already overtaken the PC.
- Speed dating? In fact, in 2012 the iPhone app Draw Something broke Facebook’s record, reaching one million users in just nine days! Mobile advances are reaching consumers at a simply ridiculous rate.
The key to lasting relationships …
- According to this WebDAM infographic, 85 percent of users prefer mobile apps to mobile websites, and yet only 45 percent of U.S. mobile marketing campaigns employ app downloads.
- In the United States, 224 million people actively use apps on their smartphones.
- On top of that, 61 percent of customers report a higher opinion of companies that offer a good consumer experience on mobile.
- As of last year, only 20 percent of CMOs used social media to engage with their customers, but 94 percent of them plan to implement strategies which include mobile apps.
- Forbes reports that mobile is the key to create a sustained relationship with customers. Mobile is increasingly becoming the platform of choice for not only social networking, but contacting customer service.
A formula for successful UBI matchmaking …
Smartphones are driving technological advances and changing UBI policy adoption figures. In 2013, a pilot program conducted in Sweden led to new customers and the transition of existing customers to a UBI program. The article outlines several key points:
- Smartphone telematics will be relevant for several years to come.
- As a UBI alternative, smartphone technology could disrupt contemporary business practices in the insurance industry through technological innovation and improved end-user experience.
- Despite its challenges, smartphone telematics offers a scalable, user friendly alternative to UBI and could result in innovations in the sales process.
Fairytale ending …
While the rest of the usage based insurance story is left to be written, it’s clear that the leading characters are destined for auto industry greatness. America already has a love affair with smartphones, apps and saving money. Auto insurers who appeal to these preferences with smartphone UBI programs can look forward to many years of “automonial” bliss.
Wondering if your policyholders will LOVE smartphone UBI? See it through their eyes in the video below: