The Smartphone v Hybrid Telematics Stack-Up

Over the last 15 years, pay-how-you-drive (PHYD) insurance has morphed from an experiment at the edge of the industry to a core offering. Insurers across the U.S. offer some form of PHYD coverage, which was identified by Property Casualty 360 as one of the hottest topics in auto insurance for this year.

In 2016, we can expect to see even broader adoption as customers continue to develop trust and insurers continue to recognize the inherent value proposition.
Those who choose to roll out a PHYD offering have three options: the smartphone app, the hybrid solution or the original OBD dongle. We’ve already compared OBD to smartphone telematics in our highly-read whitepaper, “Ten Reasons to Unplug and Unburden UBI.” But what about hybrid?

To answer that question, we have a new report for you. It’s called the Stack Up, and it measures how smartphone telematics compare to hybrid solutions. Here are the highlights.

Smartphone v. hybrid telematics to power PHYD insurance: Five takeaways

1. When smartphone telematics joined the PHYD party, it interrupted the adoption momentum – briefly. Currently, we see multiple options competing for the field, but by 2020, we should have a clear winner.
2. Hybrid holds a definite advantage over the standard OBD approach, bringing a fully-branded customer experience, better efficiency in data transmission and the option for value-added offerings.
3. Certain challenges will remain, however, as long as installed hardware is part of the picture:

• Hybrid incurs the same or similar upfront costs as does the OBD dongle: hardware, fulfillment, inventory, implementation
• Today’s dongles may not be compatible with tomorrow’s vehicles
• Insurers must assume the costs involved with replacing dongles as they wear out
• Hybrid dongles collect data on the vehicle, not the driver, which means they can’t offer one of the principal benefits that PHYD customers want: driver coaching and scoring

Smartphone telematics offers a low-cost, fast rollout, guaranteed future performance with no compatibility issues and driver-specific (as opposed to vehicle-specific) data.

While OBD devices were first to the PHYD starting line, smartphone telematics quickly outpaced the dongles in branding, cost control, user experience and rollout. In trying to find the middle ground between the two, hybrid has positioned itself in second place.

By 2020, we fully expect smartphone telematics to have claimed an undisputed lead.

To see a detailed comparison between hybrid and smartphone on cost, implementation, compatibility and more, click to download our free report: The Stack-Up: Smartphone v. Hybrid.