Farmers takes a new tack with UBI launch
Farmers Insurance announced Signal, its first usage-based insurance program, earlier this week. The mobile app-only program, Signal, explicitly targets distracted driving.
Though Farmers also is examining many of the traditional UBI rating factors, like average travel time and braking and speed tendencies, the company felt the time is right to start providing visibility and accountability into other driving challenges.
"With the app, it’s about how we provide transparency into what that driver’s doing," says Mariel Devesa, head of product innovation for Farmers Insurance. "If they look at their phone while they’re driving, we can show them how often they do that.”
There's a good reason for that: Distracted driving is beginning to affect accident rates and, consequently, insurance claim losses. Insurance premiums are on the rise – up 16% since 2011, according to the NAIC – thanks to increased distracted driving crashes.
Signal will attempt to stem that tide with education and incentives. Customers get a 3% discount off their base rate after 10 trips with the app. Then, when their policy is up for renewal, that discount can be dropped to half a percent or raised up as high as 13% depending on the data from the app. That includes how often they look at their phone while driving, a relatively new wrinkle for UBI, Devesa says.
"We won’t penalize users, but you could get a lower discount," she explains. "We see the stats changing and we want to make a positive impact." However, Farmers believes the target customer for Signal is "someone who wants to track how they’re doing and want to improve," Devesa adds.
The launch of Signal comes after a period of research into UBI techology, Devesa says. Farmers is interested in incorporating Signal into connected car platforms, but doesn't plan a dongle component due to the capabilities of the smartphone.
"We’ve been looking at the tech for quite some time, and we think it’s advanced to the point where the phone is the right fit for us right now," she says.
Signal is currently available to Arizona customers of Farmers' Smart Plan Auto policy.