How User Based Insurance is helping re-invent Insurance in the age of IoT

In today’s world many drivers see their annual premium as a tax on driving, and feel they get little back from their insurers in return. On the other hand, insurers are now faced with a new challenge of finding a way to cement customer loyalty, to be sensitive on prices and rates of churn in their balance of driving revenue up in a bid to make some return on investment.

However, the Internet of Things (IoT) is key to making all of this happen through User Based Insurance (UBI), which is one of the most familiar use of IoT telematics in automotive insurance today.

In UBI, the insurance costs are dependent upon type of vehicle used, measured against time, distance, behavior and place.This differs from traditional insurance, which attempts to differentiate and reward “safe” drivers, giving them lower premiums or a no-claims bonus.

Speaking at the just concluded Africa IoT Summit held in Nairobi Kenya, Marika Gecaga, Country Manager, Vodacom Business Kenya explained that UBI would shake up the today’s Insurance Industry. He further explained that Vodacom UBI utilizes insurance telematics to deliver a driver or vehicle risk behavior based on their acceleration, braking, speed, location, cornering and time of driving.

He also added that the effective and transparent driving behavior data, analysis and monitoring solution enables insurers gain mathematically sound insight into a driver’s driving behavior at all times.

Through the use of Insurance Telamatics there are a range of advantages include improved risk management, drive cost  is out of the claims process, enhanced customer loyalty through creating opportunities for regular contact, open up new possibilities for sales channels and revenue generating services in partnership with businesses from other sectors.

The technology also helps in lowering claims rate by enabling customers to develop safer driving behavior and reducing fraud and investigate accidents faster as well as notifying insurers or call centers in real time, using crash data.

According to a report from IHS Automotive, by 2023, 142 million people worldwide will be subscribed to usage-based auto insurance. Since UBI was introduced in Canada a few years ago by a handful of insurers, many more are now offering this type of coverage to consumers. Consumers, however, still have not yet fully embraced the technology.