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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.
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HiRoad
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.
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The display screen of a connected Yandex.Auto in-car service system showing the company's real time maps and traffic navigator sits on the dashboard of a Jaguar F-Pace automobile during a preview event at the headquarters of Yandex NV in Moscow, Russia, on Tuesday, Sept. 19, 2017. Yandex NV, the maker of Russia’s most-popular internet search engine, has created a set of services for some connected Toyota Motor Corp. and Tata Motors Ltd vehicles sold in the country as it seeks to expand beyond desktop and smartphones. Photographer: Alexander Zemlianichenko Jr./Bloomberg
Root
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.
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Metromile
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.
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Signage is displayed outside Allstate Corp. campus in Northbrook, Illinois, U.S., on Sunday, Jan. 29, 2017. Allstate Corp. is scheduled to release earning figures on February 1. Photographer: Christopher Dilts/Bloomberg
Drivewise
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.
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The Progressive Corp. headquarters is seen in Mayfield Village, Ohio on Wednesday, January 18, 2006. Progressive Corp., the first of the 10 biggest U.S. insurers to report fourth-quarter results, said profit fell 32 percent on claims from Hurricane Wilma. Sales dropped for the first time in five years.
Snapshot
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.
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SmartRide
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.
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The display screen of an integrated Yandex.Auto in-car connected service system showing a road navigation map sits on the dashboard of a Toyota Motor Corp. Rav4 automobile during a preview event at the headquarters of Yandex NV in Moscow, Russia, on Tuesday, Sept. 19, 2017. Yandex NV, the maker of Russia’s most-popular internet search engine, has created a set of services for some connected Toyota Motor Corp. and Tata Motors Ltd vehicles sold in the country as it seeks to expand beyond desktop and smartphones. Photographer: Alexander Zemlianichenko Jr./Bloomberg
CAA
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.
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Farmers
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.
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The Mercedes-Benz AG badge is displayed on the steering wheel of a 2017 AMG GLE 43 sedan during Automobility LA ahead of the Los Angeles Auto Show in Los Angeles, California, U.S., on Thursday, Nov. 17, 2016. The Connected Car Expo and LA Auto Show press days have merged to form AutoMobility LA. The show is open to the public November 18-27. Photographer: Troy Harvey/Bloomberg
Arbella
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.
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An Uber Technologies Inc. driver uses the company's smartphone app in a Tesla Motors Inc. Model S electric automobile in Madrid, Spain, on Friday, Jan. 13, 2017. Ride-hailing service Uber Technologies has launched its first electric car taxi service in Madrid, operating a fleet of Tesla Model S electric vehicles. Photographer: Angel Navarrete/Bloomberg
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.