Guidelines to consider

So how can the industry make UBI more accessible to people like Joe and Jane while continuing to accommodate the diverse preferences of others? Here are some guidelines to consider:

Make it easy. Some reports suggest that up to half of policyholders who sign up for UBI programs that require the installation of technology lose interest and drop out. It's critical that the average Joe or Jane expressing interest in a UBI program is able to get started immediately, without having to take the extra step of installing technology such as a dongle. A telematics data exchange can help accomplish this goal. Such an exchange allows policyholders, upon their consent, to share data already collected by their vehicles or other technologies with any insurer they might choose, at quote or renewal. No installation of technology is required.

Collect more (and equivalent) data. To provide benefits such as information about driving behavior or related cost savings, insurers ideally should be able to review driving behaviors across a broad spectrum of driver types, including teenager Theodore, infrequent driver Urbie, cost- and safety-conscious Penny, and average Joe. Also, to be able to award discounts equitably, it would be generally preferable for insurers to have access to the same range of driving data from each policyholder they rate. This means that data collected from Theodore's vehicle is the equivalent of the data collected from Penny's or Urbie's vehicle, and so forth, in terms of quantity and quality.

Keep it simple. The social media universe is rife with complaints about confusing feedback offered through UBI programs. For example, some policyholders have taken to social media to complain they've been denied discounts because of harsh braking incidents, even though it's sometimes necessary to hit the brakes when a driver encounters a quick signal change at a poorly calibrated traffic light. Advanced UBI approaches consider driving behavior in the full context of a driver's surroundings to identify which behaviors are truly risky. Similarly, it's sometimes better not to provide feedback about driving behavior under such circumstances when in general it would be counterintuitive or confusing to a driver (such as the above example where a driver encounters a sudden red light).

Is it possible to design a single UBI program that simultaneously addresses the needs of Selfie, Penny, Urbie, Ward and June, Theodore, and Joe and Jane? Perhaps it is. Some UBI products on the market today (or now in development) address many of the distinct needs of our hypothetical policyholders. By valuing individual policyholder preferences and establishing proper guidelines in data collection and analysis, insurers can offer a wide range of UBI options that appeal to everyone — even to the average Joe or Jane.

Special Reports /

Designing a UBI program for the ‘average Joe’— and anyone else

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