Better Driving Habits at the Core of UBI
Robert Regis Hyle | May 19, 2014
There’s a great deal to be excited about in the insurance industry thanks to the advances technology has provided. Insurers are finally able to dig into their deep bowl of data and scoop out real information thanks to the use of analytics. Insurers no longer need to be convinced their legacy systems are holding them back from a smoother operation. They just need to find the money to pay for new ones.
But nothing tops the challenge and opportunity that awaits personal auto insurers who put together a usage-based insurance program through telematics technology. The clear leader in this technology is Progressive Insurance and the rest of the industry is a distant second.
One reason for the wide gap is Progressive can trace its UBI lineage back almost 20 years. When you’ve been thinking about something that long and working to hone it into a precision tool, it’s hard not to be ahead of the pack.
There’s certainly a lot of envy among personal lines carriers toward what Progressive has accomplished with its Snapshot UBI program thus far, but even more important is what Progressive hopes to do with its Snapshot users: Make them better drivers.
There is some debate over that point among Progressive observers, but as Dave Pratt, general manager of usage-based insurance for Progressive points out, the insurer is working to find ways to educate their customers. For example, there is an audio feedback when customers brake hard, which is one of the primary indicators of poor driving habits. If you never have to slam on your brakes you are likely to never be the cause of an accident.
“Getting that immediate feedback trains those drivers to be aware of situations when they have to hit the brake hard,” he says. “We are confident customers have had fewer accidents because of that feedback. I see that as driver feedback version 1.0. If we can help people drive safer that could be a powerful change for the insurance business.”
Certainly there is a selfish motive on Progressive’s part. If you collect premiums from policyholders and never have to issue a claim you have found the Holy Grail for insurance—or any company that deals with products and services for that matter.
There are other carriers chasing Progressive’s tail, but the task ahead is difficult. Coming up with a quality UBI program is just the beginning of the battle. The real war will come down to marketing that program to consumers. Such battles can be beneficial for consumers, but the biggest winners will no doubt be the advertising venues, particularly television, where millions of dollars will be spent telling you how great their product is.
The final half of this decade will be a battle for the hearts and premiums of American motorists and it will be played out in your living room as much as it will be on the highways and byways of American travel.
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The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA is pleased to present the 2014 Webinar Series. We have many topics for you to choose from and attendance is open to all ITA members. The webinar topics are current and exciting — ranging from predictive analytics to telematics and will focus on the direction insurance carriers need to follow for the future. All webinars are presented by insurance IT professionals along with some of the leading analysts and consultants in the field. There is no cost to attend an ITA webinar. For more information and to register for the webinar, click the “title” of the webinar below.
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