The future of UBI products

The future of usage-based insurance (UBI) products is bright! Most insurers should embrace UBI and claims-related insurance telematics, while the client base will also include even more experienced, senior, and high-end vehicle drivers.

New regions and clients

The telematics insurance industry will develop even more in Latin America and Southeast Asia. It started in Europe and North America and slowly made its way to Australia, South Africa, and Japan. One of the predictions is that it will be easier to implement UBI products in those new regions than in the USA since they have different federal state regulations.

As time moves forward, clients will have fewer privacy concerns about sharing their data if they give informed consent. As discussed in our previous articles, they are getting used to personalized and usage-based products across all industries and expect the same from their insurance carriers. Furthermore, the evolution of Big Data should make it possible for them to own their telematics data. They could take their data to another provider and ask for a better offer. This freedom of choice adds to the list of reasons why they should share their data.

Ride-hailing and car-sharing market

More and more people choose not to purchase a car in crowded cities and urban areas but enjoy ride-hailing and car-sharing. Ride-Hailing companies already implement telematics platforms to monitor driving behavior for safety, fraud, and insurance purposes. Mobile telematics solutions targeting ride-hailing companies, in most cases, group together all drivers to produce a score for the overall fleet that an insurance company can use.

Insurance telematics offers car-sharing companies an opportunity to adjust the premiums based on a risk profile determined by an individual car-sharing user’s driving behavior. As the user base for these services is getting more significant, insurance companies need is growing.

Benefits of AI

Claims automatization is one of the things that will be possible thanks to AI, but there is more to come:
  • Better pricing models because of predictive analytics. In this case, AI can help actuaries make better decisions when pricing products, thus managing risk better.
  • AI improves marketing effectiveness with third-party or internal tools to analyze vast amounts of raw data and identify the media channels and marketing campaigns with the most significant reach and engagement levels. Here, big data analytics can help insurers sell more.
  • Increasing invoice processing speeds through the use of text analysis and image recognition technology, AI can help billing staff eliminate error-prone human invoice handling. Using AI-powered form reading leads to greater process efficiencies, which lowers operating costs.
  • AI can identify and mitigate claims fraud, giving claims staff more time to focus on higher-value transactions and leads to better risk management.
  • AI enables the automatic handling of compliance requirements by automatically handling complex compliance requirements. This procedure results in lower operating costs as compliance staff can direct their attention to tasks requiring human review.

Connected Cars and other vehicles

Smartphone-based UBI products will continue to rise in popularity due to easy installation and usage. Right now, mobile phones are the number one platform for connected car services.

Connected cars will be the pillars of mass-marketization of insurance telematics products as a bundled service. This change will also allow OEMs to partner with small insurers to exchange data like claims information and driving behavior. Some will work with a data analysis firm as an intermediary, and some won’t.

The fleet market has used technology like telematics for years, but most products depend on the fleet’s size and aren’t eligible for any personalization. The future goal is to create UBI products for fleets that are more similar to those for individuals.

Another solution for those who don’t want to buy cars is purchasing e-bikes, scooters, and motorcycles. Usage-based insurance services are most likely to emerge for motorcycles and micro-mobility vehicles, whereas leisure vehicles will mainly have SVR solutions. More people ride bikes or scooters to work rather than use public transportation because of COVID-19. Since the pandemic isn’t over, more of them choose to insure all their new transportation devices.

Telematics supported products will also offer crash reconstruction, with the support of video footage and sensors and vehicle life-span predictions based on the gathered data.

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The Amodo platform enables insurance companies, digital brokers, and adjacent industries to market pay-as-you-drive insurance services and engage users through smartphones.

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