The Insurance Telematics Face-off: Smartphone v Hybrid
In a competitive market driven by empowered, tech-savvy customers, auto insurers are hunting for the sleekest, most dynamic way to provide pay-how-you-drive insurance. With several insurance telematics options to choose from, which wins the day: smartphone, hybrid or OBD?
We’ve compared OBD to smartphone telematics before. In fact, we released our “Unplugged” white paper exploring in-depth the pros and cons of each. But what about hybrid? How does it change the telematics game? And how does it stack up to smartphone telematics?
Quick tour of the options:
There are currently three ways to deliver insurance telematics to your customers.
1. The OBD dongle. This device was the original go-to when usage-based insurance was first introduced. Users receive a telematics dongle from their insurer, then plug it into the OBD port under the dash.
2. The hybrid. Hybrid telematics solutions added a consumer-facing app but still rely on OBD hardware for data.
3. The smartphone app. Smartphone telematics overcome the hurdles of OBD by eliminating the cost and friction inherent to solutions with a hardware component.
How does hybrid change the game?
By connecting the OBD dongle to a smartphone app, hybrid expands OBD functionality in several important ways, leveraging some of the benefits that are already part of the smartphone package. So what are the factors that really set smartphone and hybrid telematics apart? Let’s take a look.
|Hybrid telematics||Smartphone telematics|
|Data reliability||With fixed mounting, it’s impossible for a driver to forget their telematics device.||Research shows that smartphone users are overwhelmingly likely to have their device with them at all times. Smartphone apps allow data to be translated and scored with customized algorithms available. User testing has proven that data reliability of more advanced smartphone apps is comparable to that of hardware devices.|
|Value-added services||Hybrid can deliver location-based services via smartphone.||The option to deliver value-added services is a native feature of smartphone telematics.|
|Transmission costs||None. Data is transmitted through the driver’s data plan or wi-fi.||None. This is another native feature of smartphone telematics.|
|Hardware, installation costs||Insurers pay a little less for hybrid dongles than for regular OBD dongles, because the hybrid dongles rely on driver smartphones for some of their functionality.||No cost to the insurer.|
|Implementation||Some tech support may be required, and setup involves a few steps.||Implementation is instantaneous.|
|Compatibility||Today’s hybrid dongles may or may not be compatible with tomorrow’s vehicles.||Because the device is independent of the vehicle, compatibility is not an issue.|
|Driver-specific data||Hybrid telematics can’t provide driver-specific services, because its data is associated with the vehicle, not the driver.||Smartphone UBI makes it possible to coach and score individual drivers, a major draw for telematics customers.|
|Vehicle-specific data||Hybrid can’t deliver data for multiple-vehicle applications like commercial fleets, because it’s limited to a single port.||Smartphone telematics is portable. While it can’t offer vehicle-specific services like maintenance alerts, it can serve multi-vehicle fleets.|
|Fraud prevention||Hybrid attempts to fend off deliberate fraud through a permanently-installed device.||Smartphone telematics can detect changes in driving behavior; fraud monitoring is built-in.|
Of course, we at Driveway Software continue to believe that smartphone telematics is the most cost-effective, scalable and sustainable option, giving insurers the agility to adapt their smartphone apps to the ever-changing needs of their customers. Want to learn more about the options available? Download our OBD vs. Smartphone UBI comparison chart.