The future of telematics and connected cars
Usage-based insurance (UBI) has reached a critical juncture. On the one hand, it’s taking off. For example, early consumer adopters of the technology, typically younger and safer drivers, have already led UBI adoption rates to 6% of policies in the United States (Ptolemus Consulting, 2016 UBI Global Study). On the other hand, the acceptance of UBI by the mainstream has slowed.
Customers still have concerns about data privacy, on-board diagnostic (OBD) device installation, battery drain and the ability of smartphone apps to accurately identify when a policyholder is driving their car or riding as a passenger in another car.
Connected car technology, however, could finally tip the scales in UBI’s favor, pushing it closer to critical mass. As they enter the market at a rapid pace, connected cars can significantly reduce UBI’s reliance on OBD and smartphone-based telematics. By capturing telematics data through embedded systems, most new cars can provide accelerometer and GPS information about driving behavior on their own. In fact, 25% of cars worldwide will create telematics data by 2020. And that number rises to more than 40% when looking at just the United States and Europe (Ptolemus Consulting, 2016 UBI Global Study).
To take UBI to the next level of adoption, then, carriers will need a way to work with automotive OEMs and others to obtain standardized connected car driving data for pricing and underwriting.
Introducing the UBI Data Exchange
That’s why DXC Technology, Scope Technologies and Milliman together have announced the formation of the UBI Data Exchange. At the point of quote, the UBI Data Exchange provides insurers with driving data from automotive OEMs, insurers with UBI programs, and telematics service providers. The UBI Data Exchange is designed to access driving exception or “event” data from these sources and, using data refinement technology, standardize the data to fit the expectations of Scope Technologies’ Driver Rating Platform (DRP).
The UBI Data Exchange can deliver the driving data as a driving score already in its final form or allow the carrier to create its own actuarial scoring formula, using the DRP. A unique editorial platform with a friendly user interface, the DRP allows carriers to tailor their UBI product to a specific region, target and sales strategy. The exchange does not store or own the driving data, but uses it only to calculate the driving scores needed for pricing and underwriting personal auto insurance.
The DXC UBI Data Exchange features:
- Best-in-class telematics and UBI technology from Scope Technologies, top-ranked as a UBI vendor by Ptolemus Consulting
- Deep actuarial expertise, rate filing support and advanced analytics from Milliman
- Global hosting, delivery, integration support and industry expertise from DXC, the number one provider of core insurance solutions globally and a leader in independent technology services
- A common data standardization methodology for driving incidents
The UBI Data Exchange can provide significant benefits for insurers looking to augment an existing UBI pilot, develop a proof of concept with connected car data, or build a multifaceted IoT-based insurance program.
And, for automotive OEMs and existing UBI carriers looking to monetize their driving data, there is a compelling value proposition behind participation in the exchange. This is, after all, the future of auto insurance and the growing connected car ecosystem. There are significant benefits to be had for first movers.
Scope Technologies is a leading provider of fleet management and UBI technologies for the global marketplace. The company has consistently been ranked as a top telematics and UBI provider globally. The UBI technology comes from Scope’s heavy investment in fleet management technology going back to 1999. Today, Scope’s platform monitors more than 4.5 billion miles of driving behavior.
Milliman is an independent actuarial and consulting analytics firm that has developed some of the leading UBI-related actuarial knowledge. DXC has partnered with Milliman for its ability to help insurers develop UBI insurance products that will receive regulatory approval and achieve positive return on investment.