Usage-based insurance (UBI) is gaining momentum and is set to transform the way drivers and auto insurance companies operate. More insurers are offering programs based on UBI, which allows insurance companies to monitor consumers’ driving habits for potential savings on their insurance plans. The technology powering this trend is telematics, which can measure and gather data such as hard breaking, air bag deployment, rapid acceleration, location and other behaviors that can determine whether drivers are practicing safe driving behaviors or not.
Tata Consultancy Services (News - Alert), a provider of IT services, consulting and business solutions, recently launched TCS Insurance Telematics Solution, a mobile app that turns smartphones into mobile telematics devices. This comes off of more than three decades of experience enabling insurers and offering a full portfolio of service offerings for the insurance industry.
The solution is available for iOS and Andrid devices, and enables users to track driving habits and reduce costs on insurance by adopting safer driving behavior. Insurance companies can segment customers based on risk score, perform lifetime value analysis and improve product pricing and strategy.
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“Telematics is a game changer and will ultimately drive auto insurance premiums in the future. It provides insurer’s an opportunity to improve customer engagement and service, while having the potential to make our roads safer for all of us,” said Suresh Muthuswami, president, Insurance and Healthcare at TCS, in a statement.
“The TCS Insurance Telematics Solution leverages innovations around digital technologies like mobility, cloud and big data, as well as our proprietary algorithms to help create a new business model for auto insurance,” said TCS’s Vinod Kachroo, chief technology officer, Insurance and Healthcare. “The advanced analytics provides insurers better insights into driving patterns and mobile platform provides consumers new engagement models, creating a win-win for both.”
TCS Insurance Telematics Solution is part of the company’s Insurance Innovation Lab, which is also developing a big data-based telematics analytics and insight solution.
Strategy Meets Action, an insurance consultant firm, says that 70 percent of North American property/casualty insurers are operating or planning UBI programs, and 75 percent believe UBI will fundamentally alert the auto industry between now and 2020. The National Association of Insurance Commissioner (NAIC) expects that 20 percent of all motor vehicle insurance in the U.S. will incorporate UBI in some form within five years.
A U.S. consumer survey by Towers Watson found that nearly 90 percent of participants are open to buying a UBI policy if there is no risk of premiums increasing and the majority of those interested in UBI are willing to change their driving behavior.
“Telematics data has the potential to radically change the way auto insurance is underwritten, and smartphone-based data acquisition presents a lower barrier for consumers than other methods,” said Matthew Josefowicz, managing director at Novarica, a research and advisory firm focused on insurance technology strategy, in a statement. “While some early adopters built their own telematics capabilities internally, insurers are increasingly turning to partners to help manage data capture and analysis in this important area.”
Edited by Cassandra Tucker