Apps and UBI: The beginning of a great story
Smartphone apps are becoming more popular with insurers, so we sat down with Lynden Holiday, CEO of MyDrive, to discuss the real potential behind the model and debunk the most often repeated questions.
Insurers will benefit from a smartphone app in different ways. It can be a tool to collect data that can be used for risk assessment, it can be a marketing and branding tool, or it can be both, explains Lynden. But it will never replace a blackbox.
When designing a smartphone policy, the insurers will need to look at three unknowns. The first is the service itself and the reason why the driver will want to use the app. The second is the driver, since it will never be possible to control how and if he uses the app. The third is the device, since each smartphone is equipped with different sensor grades and quality.
MyDrive took six months to republish the MotorMate app for Confused.com. They changed the look and feel of the app, but spent most of that time testing the different smartphones. 550 in total! Now the app feeds the insurers with coherent data irrespective of the device being used.
There is nothing to legislate the driver’s use of the app. If the insurer can only deal with robust data, it should look away now. The app will gather second-by-second information and build a picture of the driver’s behaviour, but it will not match what a dongle or blackbox can do. The insurer has to accept that risk and include it in the model from the start – after all, the insurer didn’t pay for the device …
Once the insurance carrier has taken into account the driver and the device, it can then look at the service model. Confused.com uses the app to demonstrate a risk profile ahead of the new policy signature. Aviva and Admiral have backed up the app, offering discounts for policies with brand such as Quote Me Happy, General Accident, Admiral, Diamond and Elephant. Others require the driver to have the app on while driving at all time. Whether it is for positive selection, behaviour tracking or pure marketing, the insurance carrier will need to define its expectations of the data accordingly.
We have analysed in great depth the role of Smartphones in Usage Based Insurance, in the Insurance telematics study. Next time, we will look at smartphone apps in more detail and debunk the most recurring questions.