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Personalizing Premium with “Pay-as-you-Drive” Insurance Offering

Technical

Personalizing Premium with “Pay-as-you-Drive” Insurance Offering

‘Pay-as-you-drive’ is a telematics-based vehicle insurance plan that helps policyholders pay the premium depending on vehicle usage. A telematics device is installed in a vehicle or smartphone which tracks the data generated by the driving behavior. This data is collected by GPS and onboard diagnostics movements on a computerized map. Data includes connected hardware or sensors, position, speed, trip distance/time, idling, harsh braking and driving, seat belt, fuel consumption, vehicle faults, battery voltage, and other engine data. This real-time data helps insurers create a personalized premium plan depending upon the customer’s unique driving behavior.

A statistic shared by Statista shows that 70 percent of U.S. car insurers will be using telematics UBI by the end of 2020 as UBI (Usage-based insurance) is a cost-effective approach of only charging consumers for the miles they drive.

Let’s see the benefit of “pay as you drive” for
1. Customer – owning a single vehicle and multiple vehicles
2. Insurer

Benefits for a customer owning a single vehicle

Customers always look for affordable and personalized insurance plans. In current work from home environments, policyholders prefer a cost-effective premium. Usage-based insurance is in demand amongst the policyholders as they aren’t using their vehicles to commute to work like before.

Safe driving habit:
The driver is made aware that his/her driving habit is recorded by the device to determine the premium amount. This awareness creates a safe and better driving habit in customers.

Smartride:
‘Pay-as-you-drive’ insurance comes up with lots of other benefits that involve roadside assistance, tracking vehicle movement, sensor support, fuel data, and detecting theft.
The tech-savvy insurers will convert traditional methods where insurance is provided to the customer based on age, vehicle type, garage location, and crash history into their modern smartride. A premium is calculated based on vehicle usage and customer driving behavior.

Save money on premium:
Historically, auto insurance premiums have been based on the car model, year of manufacturing, vehicle type, garage location, and crash history. Based on real-time data generated by telematics devices, customers can pay a premium based on actual usage and driving behavior.

Benefits for a customer owning multiple vehicles

Many customers who own multiple vehicles end up paying more sum than their real vehicle utilization. This policy helps vehicle owners to save money.

Choose to add on the cover as per data:
Policyholders can customize their policy plans with their choice of add-on covers.

Instant crash notification
The telematics device can send an instant crash notification to the insurers, including Location, Date, Time Stamp, Vehicle Identification Number, Telematics Device Unique Identifier, Severity of the crash on a five-point scale. Such notification of the event can help the insurers take action faster by cutting down the response time.

Benefits for an insurer

The usage of telematics technology is helping insurers in multiple ways.

Get real-time data:
Insurers can check the real-time data of the customer without the need and dependence on the outdated data.

Attracting lower-risk driver:
This analytics method attracts those who avoid collisions at any cost and then use their ability to see any potential hazards on the road and adjust to those hazards through speed and positioning. This is beneficial for insurers as well as customers. These lower-risk drivers will appreciate the reward of safe driving.

Manage claims:
Insurers can provide a prompt and effective response to the claim process. Data analysis and report help insurers with efficient claim settlement.

Fraud prevention:
With the help of a GPS tracker and telematics device installation, the accuracy of collected data can be ensured, which will help prevent fraudulent practices. Instead of the hindsight approach, the insurer can refer to the near accurate data by examining the historical information.

Personalized insurance:
Based on the collected information about driving behavior, the insurer can provide personalized insurance premium plans.

In the past six years, Fecund has been able to help insurers in achieving their business goals. For consultation on how Fecund can help you achieve yours, you can connect with us here.

#insurtech #innovation #insurancepremium #autoinsurance

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