UBI / Telematics Flashcards
Telematics definition
Use of wireless devices to transmit data in real time back to an organization
UBI factors impacting premium
Location of vehicle
Number of trips
Mileage
Driver behavior
Two major categories of UBI models
1) Mileage, time of day, set of predefined events (simplified)
2) More granular data (contextual basis)
Consumer benefits of telematics-based UBI
Possible lower premiums
Ability to control premiums (transparency)
Enhanced safety / improved claims experience
Non-insurance based benefits of telematics-based UBI
Faster emergency response time Road side assistance Stolen vehicle recovery Fuel efficiency Vehicle maintenance support
Insurer benefits of telematics-based UBI
Reduced claim costs Better risk pricing Mitigate adverse selection / moral hazard Modify risky behavior Differentiate product offerings
Competitive advantages for telematics-based UBI insurers
Enhanced claims management
Better low-risk identifiers
More business
Better pricing earlier
Society benefits from telematics
Fewer accidents (less driving)
Less congestion
Lower carbon emissions
Rates socially equitable
Two main public policy goals for insurance
Availability of essential insurance products
As core method for loss reduction and risk mitigation, it should provide feedback / knowledge to consumers
Consumer concerns about telematics
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
Regulator concerns with telematics
Storage / reporting of private data
Rating factors being used to calculate premiums
Need for public disclosure and transparency
Different equipment captures different data
Data challenges for telematics based UBI
Missing environmental factors
Gaining critical mass of data
Data needs standardization
Data needs to be understood in context
Issues with telematics-based UBI
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
OBD-II
Onboard diagnostics
Four categories of telematics solutions available
Dongle
Black box
Embedded
Smartphone
Dongle
Self-installed used for period of time; most popular
Advantages of dongle
Reusable Can be installed by driver Transferrable to another vehicle Low cost High reliability
Disadvantages of dongle
Only usable in modern vehicles
Vulnerable to fraud
Soon be obsolete
Black box device (UBI)
Professionally installed; most secure and reliable
Black box advantages
Can be used on PAYD, PHYD
Provide more detailed data on driving behavior
Suited for first notice of loss
Black box disadvantages
Not portable
Most expensive
Embedded device (UBI)
Manufacturer installed
Embedded device advantages
Product differentiation
Improved customer-management relationship
Potentially lower costs if recalled
Embedded device disadvantages
Higher cost for consumer (subscription based)
Not standardized
Compatibility issues
Obsolescence
Smartphone advantages (UBI)
No device, installation, or connectivity costs to insurers
Large data storage capacity
Superior communication capabilities
No additional cost to consumer
Smartphone disadvantages
Limitations associated with quality / reliability of data (not as hi-tech with accelerometer, gyroscopes)
