Usage-based insurance is personalized insurance calculated based on the driver’s skills by monitoring different parameters collected through a connected vehicle data system. UBI can be a next-generation insurance policy based on the customer’s driving habits in exchange for cheaper insurance prices.
This article discusses in detail why UBI subscriptions are expected to increase in the near future and enlists its different benefits.
How Does Usage-Based Insurance Improve Customer Retention?
As per the data shared on Independent Insurance, the average rate of retention in the insurance industry is 84% compared to 95% for the top 5 companies. However, bringing new customers on board increases the overall cost. As a result, the average rate is 7-9 times over the existing rate.
Another drawback faced by the insurance industry is getting accurate customer data to help policymakers understand user behavior and modify their driving behavior. Usage-based insurance assists in tracking various aspects of user behavior such as driver habits, vehicle mileage, location data, and road condition.
Thus, policymakers can accurately monitor all critical information, including speed, miles driven, acceleration, time, whether the user uses their phone while driving, etc., to create a customized plan based on the need and risk. In addition, it helps in improving customer retention.
Accurate Policy Pricing with UBI
UBI helps in understanding driving behavior by monitoring varied parameters. It helps policymakers build personalized plans and develop accurate pricing for policies. It is done by collecting aspects such as mileage, rapid acceleration, over speeding, etc. to enable insurers to design customized insurance plans as per the driver’s needs. It includes:
PAYD – Pay as you drive
Herein, the policymakers collect information such as odometer readings which are used for the following reasons:
It helps verify vehicle mileage. Users are offered a customized insurance plan as per the total miles covered. Additionally, it facilitates services like policy renewal, discounts, and maintenance through attributes like odometer readings.
Pay how you drive (PHYD)
This includes policymakers collecting attributes like acceleration, cornering, speed, trip information, and much more.
The details help monitor the driver’s skills and understand their driving behavior. As per the details gathered, the user will be rewarded with lower premiums for safe driving and penalized for rash driving.
Improves Customer Experience By Enabling Faster Claims
UBI betters customer experience by enabling faster claims. CerebrumX’s UBI allows policyholders to link their cars with insurers. With this, they can track the driver’s habits by gathering data related to speed, location, cornering, acceleration, etc. The data acts as evidence to help customers get quicker claims during accidents and gauge the risks involved.
Return On Investment (ROI)
Usage-based insurance has benefitted policyholders with cheaper premiums while delivering amazing results for insurers both in the long and short-term.
UBI Lowers Costs
UBI allows you to lower car insurance rates if you are a good driver and follow a low-risk driving technique. Besides, it also reduces the policy administration and thus promises an effective pricing policy based on the driving behavior that includes rewards for safe driving and lower premium costs.
UBI Increases Insurer Revenue
The global Usage-based insurance market, valued at $28.7 billion as of 2019, is estimated to reach an average of $149.2 billion by 2027. It allows policy providers to transform customer relationships by providing detailed reports and brand loyalty and thereby increase their customer base bringing in more profits.
UBI Attracts Customers More Easily
UBI has risen to prominence post-COVID, leading people to rethink their expenses and driving needs, such as car insurance premiums. It allowed customers to gain a detailed report based on their driving data and narrow down the risk in their profile.
Additionally, better billing, improved profitability, and transparency make UBI the one-stop destination for customers to get faster claims, discounted premiums based on driving habits, reduced acquisition cost, and a safe driving experience.
CerebrumX AI-powered connected vehicle data enables insurers to provide users with customized insurance policies based on their driving habits that accelerate
the roll of UBI programs for consumers. UBI helps keep pace with growing technology and other developments, assisting insurers to increase their profitability and give policyholders lower claim prices.
Connect to CerebrumX to understand more about connected vehicle data services.