The demand for usage-based insurance (UBI) is growing with no sign of abating. In fact, it is estimated that there will be 140 million UBI subscribers by 2023. This massive increase in demand can be attributed to a range of factors. Some include the shift in customer expectations fueled by the ubiquity of personalized services in other consumer experiences, the significant transformations in the auto industry, and the rise of smart “connected” cars.
The key to offering a solid UBI product that provides value to both customer and insurance company is effectively operationalizing and handling data. Not only does Earnix offer an easy way to collect data, but the actual data captured is granular and sophisticated, giving you the information you need to create personalized offers that speak directly to customer demand.
So, what is required to unlock the value to be reaped from UBI products? Read on for the 4 steps that will get you there.
1. Operationalize telematics data and business processes
As a “legacy” industry, insurance companies are not known for being early adopters of new technology. That being said, the speed at which consumers are adopting UBI makes it clear that this is where the insurance industry is headed. Luckily, adding UBI policies to your portfolio of products does not need to be a scary endeavor. By setting up the system in the right way from the start, the process will be smooth, and you will reap benefits quickly.
For UBI to work most efficiently, the telematics data it relies on must be integrated and operationalized into the business processes that run along the entire insurance product lifecycle, which includes the following:
- Data Management – collect driving data directly from the source (via a mobile app on the driver’s phone) to be used to gain deep understanding of risk and behavior.
- Modeling – use the driving behavior factors to enhance traditional models and determine more accurate products and rates.
- Quote & Underwrite – utilize a best-in-class rating engine that provides personalized UBI offerings.
- Monitor – continue to observe the policyholder’s driving behavior in order to offer feedback and rebates.
- Renew – use driving data to upsell at the right times and offer policy renewals and discounts.
With an all-in-one, end-to-end product like Earnix, it’s easy to operationalize the entire process. One mobile app gathers data on all of the relevant factors including mileage, location, time, routes, driving behavior, braking, cornering, speeding, distracted driving, local weather data, and many more. This information is then fed directly into the model to identify risk, price, product, and related offers.
2. Use telematics data to truly understand driving behavior and risk
It’s not enough to merely collect the data, you must also make sure you are collecting the right, most relevant, data and have the tools to analyze it and provide actionable insights. Earlier versions of UBI, for example, focused almost entirely on miles driven, with the mileage data being completely separate from the processes used to determine risk, pricing, rating, and billing. Products were more often than not simplified offerings to young drivers or those who were not racking up many miles.
The providers of these early-days UBI products were missing out on a huge opportunity that is easily accessible today with Earnix’s Drive-It telematics app. Drive-It collects and analyzes the data you need to be able to anticipate and proactively address the needs of today’s driver, such as knowing when a driver has crossed a state line and needs to update their coverage. With telematics data that goes way beyond just how far someone drives and includes granular detail about how they drive, your risk models will be significantly refined and more accurate.
3. Leverage advanced analytics to offer highly tailored UBI policies
The detailed driving behavior data collected by Earnix’s telematics app can be integrated with your current risk data in order to produce an accurate risk model on which to base your pricing and then make relevant offers to customers based on their actual driving behavior. Thanks to the most advanced AI and ML technology, you now have the ability to offer perfectly timed and highly personalized offers that are based on real, detailed, and granular data.
Earnix’s telematics app gives insurers both aggregated data and raw data. The aggregated data can be used to enhance existing and create new risk models, discount calculations and predictions, ratings, and some degree of policy personalization. For example, aggregate data will tell you that your customers are demanding UBI programs such as pay as you drive (PAYD), pay how you drive (PHYD), try before you buy (TBYB), and/or manage how you drive (MHYD).
On the other hand, it’s the raw data that really lets you engage with customers. Allowing you to take personalization to a whole new level, customizing product offers for individual customers in real time.
4. Engage customers through real-time data to offer relevant advice and mid-term upsell
The raw data that you collect will tell you that customer X has purchased a PAYD plan and it has just expired while they are driving. Armed with that information, you can automatically message customer X and offer to extend the policy coverage – a prime example of offering the customer exactly what they need, exactly when they need it.
With data constantly streaming to you in real time, you’ll have a continuous picture and deep analysis of your policyholders’ driving patterns at your fingertips. This is an extremely powerful tool that will not only earn your customers’ loyalty because of your ability to anticipate and respond to their needs, but will also mean increased revenue as customers upgrade and renew their policies.
Traditional insurer-policyholder relationships were primarily events-based. Contact between the two parties was mostly limited to the initial sale, annual renewals, and if and when any claims had to be filed. This transaction-based relationship does not align with the expectations of today’s customers who want a more engaged relationship with service providers. A strong UBI product by definition requires ongoing engagement with the customer – another win-win for both parties.
Over to You
Earnix’s Drive-It telematics solution offers a foundation that insurance providers can build upon to create a tantalizing array of UBI offerings tailored to customers’ needs and expectations. The combination of state-of-the-art AI, machine learning, and powerful analytics with embedded telematics data all on one platform makes for a fully integrated system that uses real-time data throughout the product life cycle, ensuring that customers and insurers get the most value possible.