26 December, 2017
Usage-Based Insurance (UBI) defines new revolutionary horizons for insurance companies. It is a new model based on the win-win relationship between the insurance companies and the customers.
What is Usage-Based Insurance (UBI)? How Does It Work?
• Insurance companies can manage their risks in a better way and direct customers to safer driving through Usage-Based Insurance (UBI).
• Customers driving safely pay lower insurance premium.
• The customer can easily install a mobile data unit in the OBDII port of his/her vehicle, the unit reports how long and at which time intervals the driver is driving and provides transition from pay-as-you-drive (PAYD) to pay-how-you-drive (PHYD).
• Sudden maneuvering and other sudden movements can be detected thanks to the patented, precision three-dimensional motion sensor, with over speed, standing on the brakes or sudden oversteer.
• Information regarding what time of day, how long and how the vehicle is used is collected in the central software on GSM and risk analysis and scoring are carried out together with other information.
• The application is customized according to the country and insurance companies.
What is the Benefit for the Insurance Companies?
• In the current situation, the driver risk assessment is not based on actual field data and this situation causes the generation of insurance premiums with information that is not based on actual data. Risk management remains weak because it is not actual information, and damage rates are challenging profitability.
• Through Usage-Based Insurance (UBI), valuable information in terms of risk analysis such as how long and how, where and at which time intervals does the driver drive the vehicle. This information provides the insurance company with the opportunity to accurately identify driving risks and risk groups and to predict damage risk ratios.
• Leading insurance companies have inestimable customer profile knowledge that their competitors do not have.
• Accident management can perform instant accident alarm and accident animation.
When the Use Based Insurance (UBI) is started to be applied;
• Fair and accurate price determination is carried out,
• Live feedback is provided in order to improve driver performance and risk is reduced through intervention,
• It rescues the insurance company from wrongful and improper drivers,
• The proposition value is increased by offering value added service proposals within the scope of security and comfort,
• The market share can be increased by offering more accurate proposals due to low risk.
In conclusion, overall improvement in profitability is provided for insurance companies and lower insurance costs and increased road safety are provided for drivers.
Usage-Based Insurance (UBI) Applications around the World
• The number of vehicles in the world is more than 2 billion, less than 5% of the vehicles have fleet management and tracking units and very few are within the scope of UBI.
• In Europe, 2.5 million vehicles are being tracked. Approximately 500,000 of these vehicles are within the scope of UBI.
• According to Frost & Sullivan’s estimation, the market will grow by 40 times and there will be telematic units in 20 million vehicles within the scope of UBI by 2018.