Usage-based insurance has made significant advances as the insurtech revolution has marched across the industry. J.D. Power & Associates reports that 2017 saw a 20% increase in the amount of UBI policies in the U.S. compared to both prior years, spurred by increasing comfort with insurers’ digital initiatives overall. These include not just discount programs, but fully underwritten UBI programs, or pay-per-mile offerings. They all use the customers’ increased connectivity – either from the cell phone or on-board computer – to their advantage. Following are 10 programs that run the gamut from insurtech startup to established carriers that illustrate the depth and breadth of UBI.
Somehow, HiRoad has flown relatively under the radar, but represents an important experiment by its parent company – State Farm. The largest auto carrier by market share in the country is using Rhode Island – a state where its penetration is low – to try out the fully direct-to-consumer, usage-based carrier. HiRoad launched in late 2017 in the state and has built a full technology stack including data and analytics capabilities from BlueOwl with core insurance systems from EIS Group.
This insurtech is rapidly maturing. Currently live in 17 states, Root should be available across the country by the end of the year. It’s also heavily committed to its home city of Columbus, Ohio, announcing in June that it will construct a 65,000-square-foot office space and quintuple the size of its workforce, especially in software engineering. Root also announced Series C funding of $51 million this year.
After about a year of being offered across the country, Metromile customers have now been insured for 1.3 billion miles of driving – not bad for a company that specifically targets low-mileage drivers. It’s also working on refining its AI service bot, Ava.
Allstate’s increased focus on connected-car efforts is well-documented: The company’s subsidiary Arity was built out of a recognition that the data an insurer could gather and use on drivers is going to be key in product development inside and outside insurance going forward. And a lot of data is available: Allstate has more than 35 billion miles of data from its telematics program Drivewise and more than a million active users. The company is also exploring a form of metered pay-per-mile UBI, Milewise; its Esurance subsidiary offers both kinds of products as well. "Milewise is still a limited engagement in a few states but where available, but it has been popular and we’ll continue to roll it out in additional states like we did Drivewise," an Allstate spokesperson says.
The venerable grandfather of today’s boom, Progressive’s Snapshot has laid low since launching a mobile-app version of the program, as competitors have entered the market. However, in the company’s most recent earnings call, CEO Tricia Griffith says the company is pleased with the “take rate” of the mobile app, indicating some growth from the traditional OBD-II based program; the company also sees the potential to impact distracted driving behavior with the data it’s getting from mobile.
Nationwide’s SmartRide program is also looking to tackle UBI. The company partnered with TrueMotion earlier this year to get some aggregated data on smartphone use behind the wheel. Nationwide is also, like some other companies, looking into metered, pay-per-mile UBI in addition to the behaviorally-focused programs. Finally, the company hired Pete Frey away from American Family as commercial telematics director, with the charge to develop and oversee a usage-based insurance program and connected business fleet platform.
CAA is jumping right into the metered model with the launch of its MyPace program this year. It uses Octo Telematics’ Octo Surround, which couples an OBD-II device and mobile app for value-added services like driver feedback and vehicle health information.
Taking on distracted driving is a new trend in UBI. One of the first such initiatives that explicitly targets this claim source is Farmers’ Signal program. Launched just over a year ago in Arizona, Signal is nearing a point when the initial learnings will start yielding new program features. The company is also working with Honk, a technology platform for connected stranded drivers and repair facilities, to help developed a white-label version of its offering for insurers.
The Boston-based insurer has launched a dual-facet UBI program along with Cambridge Mobile Telematics. Wheel Focused provides feedback to drivers based on five metrics: rapid acceleration, hard braking, sharp turns, speeding and active phone use, in order to curb bad driving behavior. Arbella is also a customer of CMT for its DriveWell UBI app, a more traditional program.
Plymouth Rock
Another New England-area carrier is trying a different incentive structure for its Road Rewards program. Using the app, also created with Cambridge Mobile Telematics, customers can earn points towards free coffee from Starbucks, movie tickets from Showcase Cinemas and fuel discounts from Shell. The program still depends on customers’ driving behavior such as hard braking, speeding and phone use, but Plymouth Rock says collected driving data will not be used for pricing, underwriting or termination of policy decisions.