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Analyzing Usage-Based Insurance

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The Zebra, a website devoted to the insurance industry, recently published a report, the 2019 State of Auto Insurance, which reveals car insurance rates are on the rise for 4 out 5 U.S. drivers.

According to the report, insurance companies are adopting technologies to monitor driver behavior, which has the potential to benefit safe drivers and provide extensive data about driving trends. Newer car models with modern anti-theft and safety technology may reduce theft and collisions, but insurance companies offer few, if any, discounts for having these features in your car.

Usage-based insurance (UBI) involves the use of technology to monitor how, where, and how much a person drives to assess their risk and price their insurance policy accordingly.

FenderBender spoke with Alyssa Connolly, director of  marketing insight at The Zebra and asked a few questions on usage-based insurance.

As told to Melissa Steinken

Why would a driver be interested in usage-based insurance?

Drivers who spend little time on the road could save by opting for a usage-based insurance policy. This could monitor their speed, the neighborhoods they drive through, or possibly only how many miles they drive. There are some policies that are pay-per-mile only.

Does usage-based insurance encourage the use of safety features in a car?

People who opt for a UBI policy likely know they can save the most by driving most safely, and some in-car technologies can help them do that.

What might affect someone’s insurance is the value of those technologies. It’s often very expensive for an insurer to repair or replace new sensor technologies, advanced windshields, bumpers, etcetera, so drivers might not see an insurance discount for driving that safer car.

What is causing the trend in which consumers are paying more than ever before?

It depends on where you live, but a lot of the rate increases can be attributed to major weather disasters, more populated areas, and even distracted driving behavior.

Do you envision usage-based insurance becoming popular, specifically with Generation Z customers?

We know that insurance companies want to know how their customers are driving and how likely they are to get in a crash and file a claim.

Usage-based insurance policies give insurance companies far more data than they’d ever had access to before, so we think many insurers will start offering options for UBI if they don’t already.

 

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