Global UBI auto insurance development status
Currently, UBI users are mainly concentrated in Europe and the United States. By the end of 2015, there were about 12 million UBI users. UBI in the most developed Italy, the penetration rate of UBI reaches 14%, while other countries are below 5%. Overall, the development of UBI is still slow. One of the main reasons here is that people are still confused about the personal driving data collected by the Internet of Vehicles. They oppose joining the Internet of Vehicles insurance business due to privacy reasons, which has brought certain difficulties to the popularization of the Internet of Vehicles.
However, as UBI started from a simple payment by mileage (PAYD) installation of OBD devices and the rise of mobile applications and preinstallation markets, regulators have realized that UBI has brought positive social effects on industry innovation, insurance company profits and changing driving habits and reducing car accidents. These factors make UBI auto insurance optimistic in the long-term trend.
2.1.1 The current development status of UBI auto insurance in the United States
Looking at the current development of UBI products in the world, the United States is a well-deserved leader. The first UBI project began to appear in the United States a decade ago, when Progressive Insurance and General Motors Insurance (GMAC) began tracking mileage through GPS technology and cellular technology (wireless communication technology), providing mileage-based premium discounts. These discounts are often provided to policyholders in conjunction with some additional services, such as roadside assistance and vehicle anti-theft services. Recently, with the rapid development of technology, the efficiency of using vehicle networking technology has been improved, allowing insurance companies to not only know how much mileage people drive, but also understand how and when the insured drive. The result is that we can see the development of several different UBI services including Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Pay-As-You-Go and Distance-Based Insurance.
At present, major insurance companies in the United States own or are actively promoting UBI projects, and UBI policies occupy a large share of the US personal auto insurance market. According to SMA research, UBI will grow rapidly in the United States. It is estimated that by 2020, about 70% of auto insurance service providers will use the Internet of Vehicles UBI soon. According to the May 2014 CIPR survey, insurers in the 47 state and regional insurance departments in the United States, except for five jurisdictions (California, New Mexico, Puerto Rico, Virgin Islands and Guam), are currently providing Internet of Vehicle UBI services. Research shows that in 23 states, more than five insurance companies are active in the Internet of Vehicles UBI market.
The current major UBI projects in the US market are as follows:
Progressive (Snapshot)——The earliest entrant in the UBI market, and its products are based on plug-in devices. The device first monitors the driver for 30 days and gets a discount on non-UBI premiums. After the subsequent five months of continuous monitoring, the driver returns the equipment and updates the discount rate. The discount rate is capped at 30%, and remains unchanged until the corrections that significantly affect premiums appear.
State Farm (In-Drive)—Use plug-in devices to monitor driving behavior, provide up to 50% discount when renewing insurance, and provide value-added services that can be selected through the Internet or mobile application. Consumer purchases of these value-added services provide the company with an additional revenue cash flow.
Allstate (DriveWise)—This project is currently available in 10 states, providing a combination of the above two products. The initial discount is 10%, and the subsequent maximum is 30%. Discounts are based on total mileage, daily driving time, sudden brakes and more than 80 mph. The company notifies the driver on its website and encourages the driver to form better driving habits.
2.1.2 Current status of UBI auto insurance in the UK and Europe
The following figure is European UBI insurance (now called TMI) market penetration rate and trend chart . The United Kingdom, Italy, France and Germany are ahead of other European countries. At the same time, recently, operators have also joined the battlefield of automobile UBI. is the most representative of Vodafone, the largest telecom operator in Europe. In terms of customer ownership and market share, Vodafone may be the largest UBI service provider in Europe .
Vodafone helped more than 30 insurance companies to implement TMI/UBI insurance methods (the figure below: VDF insurance implementation must have an OBD terminal).The UBI strategy explained by its IOT department leader is the same as the insurance company's requirements (below, 6 elements).
VDF describes the six module elements of UBI insurance:
European market development was initially hindered by the non-standardized position of the OBD port of European vehicles. Automobile manufacturers have begun to consider the application of in-vehicle equipment, not only insurance, but also many in-vehicle product options. In addition, the decline in technology costs, better user-only installation functions, and the development of application-based smartphones have gradually reduced this obstacle, and almost all vehicle-mounted terminal products have gradually tended to use OBD interfaces.
There is already evidence in the UK market that UBI products are attracting the attention of the mass market. Insure the Box, the first UK company focusing on selling UBI products, was founded in 2010. As of the end of 2012, about 125,000 insurance policies have been attracted. These data have also attracted the attention of mature insurance companies in the UK market. For example:
◎ The Cooperative Insurance Society released UBI products (for young drivers) in early 2011 and attracted 12,000 customers in the following 11 months.
◎ The Automobile Association released Drivesafe in 2012, targeting high-price groups such as young drivers and newly qualified drivers.
◎ Aviva released its test application RateMyDrive in February 2013, and may receive up to 20% discount by downloading free apps.
UBI development in other parts of Europe follows the UK. For example, in Italy, vehicle-mounted equipment technology has important applications in claims management. Current development projects include:
◎ PolisVoorMij (Netherlands) – an application-based product that offers up to 20% discounts based on good driving habits.
◎ Provinzial (Germany) – Mein Copilot offers up to 10% discount based on good driving habits, while providing value-added services such as automatic emergency calls.
◎ Allianz (Italy)——In addition to providing basic discount functions, Sesto Senso can also provide value-added services such as personal safety, car theft prevention, car failure and other value-added services.
2.1.3 Current Situation of UBI Auto Insurance in Israel
CLAL (Clal Insurance Enterprises Holdings Ltd.) is Israel's second largest insurance company headquartered in Tel Aviv, Israel. It was founded in 1987. The company mainly provides insurance and financial services.
Since February 2012, CLAL Insurance and ADAS giant Mobileye (the best ADAS terminal) have cooperated to ensure the safety of young drivers. CLAL Insurance adopts a policy of forcibly installing Mobileye for drivers aged 17-20. CLAL and Mobileye promote products through TV advertising, online media and advertising. The ADAS equipment is given to customers by an insurance company, and a premium discount of 10%-25% will be given to vehicles equipped with Mobileye products.
Attachment: According to test data from the Israel Insurance Regulatory Commission, from 2009 to 2012, there were not many cars loading vehicle network equipment, but after three years of tracking, the chance of vehicles installing vehicle network terminal equipment being injured and claiming decreased by about 50%. In 2013, due to the Israeli government's financial subsidies, 40,000 new vehicles were loaded with Internet of Vehicles equipment. The 40,000 vehicles were reduced by more than half from mild injuries, severe injuries or to mortality, reducing economic losses to 69.7107 million new Sikres, or less than 120 million yuan. Previously, public data from the Israeli government showed that Israel's economic losses caused by traffic accidents accounted for 1.4% of Israel's GDP every year. From this point of view, the implementation of UBI auto insurance may help Israel reduce economic losses, slow down congestion, and reduce resource waste.
2.1.4 Current Situation of UBI Auto Insurance in Asia
Asian insurance companies have not yet taken practical actions on UBI products, but have also shown some interest.
Thailand: Products jointly developed by Carpass (a technology company) and many insurance companies such as Bangkok, Siam Commercial, Deves, Samaggi, etc. provide discounts based on annual mileage; using plug-in device - IceCube; excellent driving habits also give discounts.
South Korea: South Korean regulators have begun to encourage UBI products.Although as of now, the only products that have been obtained are low-profit simple products, most major South Korean auto insurance companies are involved. For example, Hyundai Maritime Fire Insurance, you will get a 3% discount when participating in Blue Link, and provide an accident emergency warning system; Samsung Fire Maritime Insurance, based on the annual mileage discount, floats between 6% and 12%.
Japan: In this most mature insurance market in Asia, insurance companies are increasingly interested in UBI products, but there is still no important UBI products. Existing products are simply based on pre-installed equipment and based on mileage.
2.1.5 Current development status of China
On April 1, 2015, the China Insurance Regulatory Commission required all insurance companies to start a formal pilot of rate marketization. UBI began to become a key area for insurance companies to focus on. UBI has become a household name in Europe and the United States, and is currently in its infancy in our country.
In February 2015, the National Bureau of Statistics and Industrial Securities Research Institute jointly released a report: It is predicted that by 2020, 25%-30% of China's auto insurance will be UBI (Usage Based Insurance) auto insurance, with an annual scale of about 300 billion-400 billion. Although China has already carried out auto insurance premium reform, due to market environment and policy factors, UBI products from the insurance company level have never been implemented.
However, this is not short of innovative explorations of UBI auto insurance by Internet insurance startups.
For more domestic UBI information, please refer to relevant industry consulting reports, such as Shui Qing Muhua's "2016-2020 Global and China UBI Industry Research Report"
