Imagine a car insurance policy that can be controlled by a mobile phone app, which tracks your driving record and reduces your premiums. The future of Usage-Based Insurance (UBI) is near, and it is based on what, where, when, and how much you drive. On the basis of data recorded by technology hidden within your phone or on a device connected to your car, you will receive a competitive quote from your insurer.
The phenomenon of connected car insurance or UBI was started in the late 2000 as an experimental effort by certain insurers working in regional markets. The idea was in response to an increased number of smart phones connecting cars. UBI will soon become a mainstream offer by insurance companies across North America. The new technology will provide you with information regarding your driving records on a mobile app, and this will give you the power to monitor your driving patterns. You can also make required adjustment to increase your chances for insurance discounts.
Mileage-based policies have been in the market for many years, and people now have options to get good driving record-related discounts. Pay how you drive and pay as you drive models are more likely to become measuring metrics to calculate insurance cost. This future of car insurance will also be helpful in managing the pay how you drive model by analyzing the data. An analysis conducted by Frost & Sullivan suggests there is huge space for usage-based car insurance policies, and this model is expected to reach around 100 million drivers by the year 2020.
Some smartphone apps are also offering try-before-you-buy options that are targeting millennials, and offering an analysis over vehicle safety and score they can obtain by sharing on social media.
One-size-fits-all premium approaches are causing dissatisfaction among insurance customers. These models don’t reflect the usage of car, and may become costly for some people. Authentic data from individual driver can provide better clarity and customization options for insurance companies.
A huge influx of connected car technology has made it easier for usage-based car insurance to thrive in the market. Various sensors installed in new cars also make the process of gathering data quite easy. When customers will be able to check real-time data from these sensors, available on mobile platform, they may get reduction on their insurance costs due to crash detection. Getting vehicles back after repair, and managing claims will also become easier.
These technology based car insurance tools will become popular among consumers, and they will make it easier for insurers to redesign policies and quote comparison. Other apps will also play their part to further improve the business. Some insurance companies provide a smartphone app and a plug-in device for checking vehicle health, tips to make everyday commute better, and location-based services, will also provide a complete digital experience to vehicle owners and insurers.
The future holds a lot of potential for digital premium valuations, insurance coverage, and interactive tools. So don’t be surprised when in near future your auto insurance company asks you to plug-in a device in your car.