Understanding UBI – The future of insurance

Technology impacts almost every aspect of our daily lives. We use our smartphones to order food, pay utility bills, and contact loved ones. Industries have started automating various processes to increase productivity and enhance their offerings. We celebrate all the achievements and advancements made in science and technology on 11 May – National Technology Day.

As we observe the day in 2024, let’s explore how technology has revolutionised the insurance world. Over the years, insurance companies have adapted their offerings to cover petrol, CNG, diesel, hybrid and electric vehicles. Usage-Based Insurance (UBI) is a tech-based development shaping the future of insurance.

Can you imagine a world where your car insurance premium reflects your unique driving habits? UBI makes this world a reality. It is a pay-as-you-drive and pay-how-you-drive system. UBI uses telematics to collect data on your driving behaviour. It considers the distance driven, time of day, braking patterns, acceleration, and even phone use while driving. Insurance companies then analyse the data to create a personalised risk profile for each individual. Safer drivers and those who drive less can enjoy lower premiums than those who engage in risky behaviour and drive frequently or at night. The UBI concept is simple – it offers fair pricing based on actual risk.

Traditional insurance models offer all drivers the same insurance premium. UBI flips the script and offers premiums based on usage and driving habits. Those who drive less frequently and responsibly pay fair premiums based on their habits.

UBI encourages drivers to adopt safer habits to reduce their premiums. Apart from helping them with lower insurance costs, better driving also creates a secure environment for everybody on the road.

UBI empowers insurance companies to assess risk accurately and on an individual basis.

UBI opens the door for more customisations in the future.

Zuno has introduced UBI plans in India to help build a safer environment for everybody. We launched PAYD (Pay As You Drive), a unique policy that uses your average usage to provide a fair premium quote. PAYD policyholders enjoy coverage for a specific number of kilometres each year. Zuno also uses telematics to offer lower premiums based on driving behaviour. We introduced the Zuno Driving Quotient (ZDQ) challenge, encouraging drivers to measure their driving metrics for 15 days. Based on the results, we offered a daily driving report to help these individuals improve. At the end of the challenge, we gave them a final driving score and offered savings on motor insurance premiums to reward high scores.

UBI requires a system to measure various driving parameters. At Zuno, we use a smartphone app that you can download directly on your mobile phone. You can turn the app on whenever you start driving to measure various metrics.

After you turn the app on, it collects data about your driving. It measures your speed, sudden acceleration, fast turns, phone usage while driving, and hard braking. Most UBI apps offer a daily, weekly or monthly report or score.

We securely access the collected data to assess your risk profile. Drivers who follow the speed limit, accelerate and brake gently, and stay off their phones will have a lower risk profile than those who speed often and brake hard.

After all our analysis, we’ll provide you with a personalised premium. Safe drivers will enjoy lower premiums.

UBI became a reality in India in 2022. Since then, it has gained significant traction, and we can expect more benefits in the future. On National Technology Day, as we celebrate the achievements so far, let’s also look towards the future:

Currently, UBI provides a daily driving report. In the future, we can expect real-time updates. You could get alerts while driving when you’re going too fast or have braked too hard.

Future UBI programs might incorporate traffic patterns and weather conditions to analyse driving behaviour better and provide more precise pricing.

In the future, we might be able to use telematics data to develop features that warn drivers about potential hazards to prevent accidents.

UBI indicates a paradigm shift in the way insurance companies offer their products. They now reward responsible driving, promoting a safer atmosphere on the road and offering car insurance premium personalisation. So, if you think you have what it takes to drive safely and reduce your premiums, visit the Zuno website today. Take up the ZDQ challenge and understand your driving behaviour with our detailed analysis. Don’t forget to use your high driving score for discounts on your next insurance renewal premium.

ARN: Zuno/Blog/Understanding UBI – The future of insurance/05/24/02. 

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