Usage-based insurance (UBI) is growing in popularity, providing carriers with valuable data that may help them reduce loss risk while enabling a more individualized and customized premium structure for customers—a key differentiator in an increasingly competitive marketplace. The introduction of UBI smartphone apps has made these programs more affordable for carriers, and therefore more prolific. However, as I shared in my last post, it’s also made collecting high-quality data more difficult. Yet the success of a UBI program can hinge on accurate data that carriers and customers can trust.
Below are key capabilities carriers should look for from a UBI app solution provider to ensure they and their customers are getting the best results from a UBI program.
Manage across devices
Variations between phone types may significantly skew UBI driving scores. It’s very important that a solution provider is able to normalize results across a wide spectrum of devices if they’re going to yield data that can result in consistent and valid scores.
The ideal app-based program should be able to integrate updates—such as changes in road conditions, maps and driver input—within about 48 hours, and then report back to the customer. This capability can not only help to provide data accuracy, it also can add credibility to the insurer and can further engage the customers to interact with their insurance providers.
Through algorithms and business rules, a good app-based UBI program can become “intuitive” in understanding when a driver is actually driving, as opposed to when the driver is on the bus or in a taxi. This type of program can generate a unique driver signature for each user that may help to provide that only the right trips are attributed to the driver.
Data privacy and security
UBI is impossible without customer buy-in. A very important part of that buy-in includes trust—both in the accuracy of the data and in efforts to properly protect personal information. In this regard, a solution provider may offer:
- Robust data encryption capabilities (during both transfer and storage)
- Limited data storage on the user’s phone
- Top-of-the-line data warehouse, disaster recovery and redundancy capabilities
- Transparency regarding how data is collected and used
These key capabilities, and the high quality data they help generate, can provide the foundation for a UBI program that can result in both short and long term benefits for carriers and their customers.