UBI / Telematics

Question 1

Telematics definition

Answer 1

Use of wireless devices to transmit data in real time back to an organization

Question 2

UBI factors impacting premium

Answer 2

Location of vehicle
Number of trips
Mileage
Driver behavior

Question 3

Two major categories of UBI models

Answer 3

1) Mileage, time of day, set of predefined events (simplified)
2) More granular data (contextual basis)

Question 4

Consumer benefits of telematics-based UBI

Answer 4

Possible lower premiums
Ability to control premiums (transparency)
Enhanced safety / improved claims experience

Question 5

Non-insurance based benefits of telematics-based UBI

Answer 5

Faster emergency response time
Road side assistance
Stolen vehicle recovery
Fuel efficiency
Vehicle maintenance support

Question 6

Insurer benefits of telematics-based UBI

Answer 6

Reduced claim costs
Better risk pricing
Mitigate adverse selection / moral hazard
Modify risky behavior
Differentiate product offerings

Question 7

Competitive advantages for telematics-based UBI insurers

Answer 7

Enhanced claims management
Better low-risk identifiers
More business
Better pricing earlier

Question 8

Society benefits from telematics

Answer 8

Fewer accidents (less driving)
Less congestion
Lower carbon emissions
Rates socially equitable

Question 9

Two main public policy goals for insurance

Answer 9

Availability of essential insurance products

As core method for loss reduction and risk mitigation, it should provide feedback / knowledge to consumers

Question 10

Consumer concerns about telematics

Answer 10

Become another black box rating factor
Privacy / data protection
Failure to achieve material loss mitigation
Another data mining exercise
Limited regulatory oversight
Data not transferred to another insurer

Question 11

Regulator concerns with telematics

Answer 11

Storage / reporting of private data
Rating factors being used to calculate premiums
Need for public disclosure and transparency
Different equipment captures different data

Question 12

Data challenges for telematics based UBI

Answer 12

Missing environmental factors
Gaining critical mass of data
Data needs standardization
Data needs to be understood in context

Question 13

Issues with telematics-based UBI

Answer 13

Cost of technology, hardware, and maintenance of such
Demands in terms of storage
Lack of standardization
Proprietary information
Behavior cannot always be linked to rated driver
Need for transparency

Question 14

OBD-II

Answer 14

Onboard diagnostics

Question 15

Four categories of telematics solutions available

Answer 15

Dongle
Black box
Embedded
Smartphone

Question 16

Dongle

Answer 16

Self-installed used for period of time; most popular

Question 17

Advantages of dongle

Answer 17

Reusable
Can be installed by driver
Transferrable to another vehicle
Low cost
High reliability

Question 18

Disadvantages of dongle

Answer 18

Only usable in modern vehicles
Vulnerable to fraud
Soon be obsolete

Question 19

Black box device (UBI)

Answer 19

Professionally installed; most secure and reliable

Question 20

Black box advantages

Answer 20

Can be used on PAYD, PHYD
Provide more detailed data on driving behavior
Suited for first notice of loss

Question 21

Black box disadvantages

Answer 21

Not portable

Most expensive

Question 22

Embedded device (UBI)

Answer 22

Manufacturer installed

Question 23

Embedded device advantages

Answer 23

Product differentiation
Improved customer-management relationship
Potentially lower costs if recalled

Question 24

Embedded device disadvantages

Answer 24

Higher cost for consumer (subscription based)
Not standardized
Compatibility issues
Obsolescence

Question 25

Smartphone advantages (UBI)

Answer 25

No device, installation, or connectivity costs to insurers
Large data storage capacity
Superior communication capabilities
No additional cost to consumer

Question 26

Smartphone disadvantages

Answer 26

Limitations associated with quality / reliability of data (not as hi-tech with accelerometer, gyroscopes)