Product Code: OI00012-004
The premise of UBI is that it identifies good drivers and influences behavior
resulting in fewer or less severe accidents. Insurers charge these drivers
lower premiums for improved claims experience. Insurers verify the driver' s
behavior wirelessly from a telematics device in the vehicle supported by a
robust set of IT solutions.
Features and benefits
- Assessment of the UBI marketplace.
- Identification of key UBI ecosystem participants.
- Discussion of the major business models being used by insurers offering
- Discussion of the drivers and inhibitors shaping the UBI marketplace.
- Discussion of the technology and telecommunications requirements needed to
implement and support UBI.
UBI premium-setting is based on an individual driver' s behavior and represents
a dramatic shift from insurers' use of the law of large numbers. This
fragmentation of the risk pool puts insurers on a path towards one-to-one
customer interactions and provision of best-of-class customer service.
Your key questions answered
- What is usage-based insurance?
- Which insurance companies are offering UBI?
- What are the opportunities for mobile operators in the UBI marketplace?
- What are the opportunities for IT firms supporting insurers offering UBI?
- What are the value propositions and major objectives of key UBI ecosystem
Table of Contents
- In a nutshell
- Ovum view
- Key messages
- UBI repeals the law of large numbers
- UBI programs need robust mobile telecommunications
- UBI is all potential
- No optimal rating model apparent
- Insurers will be getting deeper into the information business
THE UBI LANDSCAPE IS AN ECOSYSTEM OF MANY INDUSTRIES
- UBI is a dramatic shift from traditional automobile insurance
- The UBI marketplace encompasses a diverse ecosystem of industries
- Embedded chips and robust wireless telecommunications make UBI possible
- The essence of success in the UBI ecosystem is coopetition among industries
- A growing number of insurers worldwide participate in the UBI space
FINDING THE RIGHT GO-TO-MARKET STRATEGY IS CRUCIAL
- A variety of insurer business models exist, each with its own implications
for UBI providers
- Prepaid UBI models let customers buy blocks of miles
- Mileage/odometer-based UBI models are relatively inexpensive
- Behavior-based UBI models provide insurers with the most desirable
- Location-based UBI models are desirable, but also controversial
- Device-based plus VAS models create revenue opportunities
- Insurers must balance the benefits of key rating factors with the cost of
- The UBI space is characterized almost entirely by market potential
- There are three major operational platforms in the UBI ecosystem
- Customer trust platforms can help insurers save on UBI operational costs
- Partner platforms support a variety of UBI business models
- Ownership platforms give insurers VAS positioning strength
- There are several market positioning paths available to insurers
DRIVERS AND INHIBITORS SHAPE THE UBI SPACE
- A host of market drivers could make UBI a reality
- Inhibitors slowing UBI adoption are centered around cultural inertia and
- UBI participants must manage a wide range of regulations
TECHNOLOGY PLAYS A KEY ROLE IN THE UBI SPACE
- Technology underpins entire process
- Wireless communications is critical to UBI
- UBI platforms require equipment, connectivity, and applications
- Mobile operators need device platform partners for UBI
- Wireless access and device costs must come down
- Recommendations for insurance companies
- Recommendations for mobile operators
- Recommendations for information technology vendors
- Alternative views
- Further reading
- Ovum Consulting
- Figure: UBI marketplace ecosystem
- Figure: Value propositions and desired outcomes of four key UBI
- Figure: Emerging usage-based insurance business models
- Figure: Potential exposures and behaviors for rating UBI
- Figure: Three major UBI operational platforms
- Figure: In-vehicle device platform and platform players