Pay-Per-Mile Car Insurance - Telematics Vendor

Learn more about the new developments in on-demand insurance that are reinvigorating mileage-based offerings and how to benefit.

Staying Competitive With the Latest in Mileage-Based Insurance Telematics Programs

Insurers know that in order to drive demand for insurance products that offer greater value, build trust with policyholders and provide rich, engaging experiences, it’s necessary to offer more personalized insurance programs and services to policyholders. Such programs that have seen tremendous reinvention and resurgence are mileage-based insurance telematics programs.

Mileage-based (Pay-per-mile) car insurance programs are regaining traction with insurers who are looking not only to compete, but thrive in developing innovative insurance telematics offerings in a mature market. Mileage-based programs are often referred to as the Pay-As-You-Drive model, a model where policyholders pay based on how many miles they drive. In the past, mileage programs simply collected data on a policyholder reported mileage. More personalization and new technology developments are now enabling these programs to vary greatly with respect to mileage context used, rate determination and billing model. As a result, they are quickly generating new interest as well as capturing market share.

Mileage-based Program Scenario Example: A policyholder can be charged a flat rate fee every month based on typical insurance costing factors plus an additional fee per mile driven, up to a certain number of miles after which point they may not be charged. Alternatively, they can pay for insurance by purchasing blocks of miles, similar to how consumers pay for prepaid cellphone fees.

Mileage programs offer auto insurers a number of benefits – they are quick to implement, offer more transparency and provide policyholders with options for insurance that meet their lifestyle needs and values. What is more, they also help increase policyholder retention and encourage safer driving through behavior-based coaching. In fact, research shows that telematics programs overall increase policyholder retention by 18 percent – 20 percent through regular engagement and driving feedback.

Why data-driven, mileage-based insurance programs could become the ‘new norm’

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Data-Agnostic Collection Options – Connected Car and Telematics-based Programs

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Comparing Mobile Apps, Hybrid Bluetooth and OBD-II

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Increase Your Customer Base and Grow Your Entire Book of Business

It’s no surprise that insurers are already re-thinking their insurance program portfolio and adding new mileage-based insurance programs as available offerings to their book of business. For example, our mileage-based client Amica Mutual Insurance Co., a top 25 automotive insurer in the United States, announced the introduction of a mileage-based program called FlexMile which allows policyholders to purchase a set number of miles up front and lock in a rate good for up to 3 years. By doing so, they are able to offer flexible, personalized and innovative programs that deliver unique and engaging experiences demanded by policyholders, which also help better control claims ratios and costs for the insurer. Learn more about Amica Mutual Insurance Co. Mileage-based Program.

Pricing Structures for Mileage-based Insurance Telematics Programs

Below is a breakdown of the different pricing structures that can be implemented in a mileage-based insurance telematics program, starting with a traditional “Basic Rate” pricing structure, followed by a “Personalized Rate” and finally, a more comprehensive “Variable Mileage Rate”:

Pay-per-mile Insurance Telematics Solution - Pricing Structure

Billing Options for Mileage-based Insurance Telematics Programs

In addition to the flexibility and personalization around pricing structures available, a variety of billing options also exist ranging from a traditional “Prepaid Mileage” plan to “Post-paid Recurring Billing” and finally, “Post-paid Ad-hoc Billing”. Here is a detailed breakdown:

Pay-per-mile Insurance Telematics Solution - Billing Options

Why IMS for Mileage-based Insurance Telematics Programs?

IMS UBI Intelligence delivers on the promise of being the premier, most complete UBI solution, offering a one-stop shop for an insurer’s UBI needs – no additional suppliers or multiple partners to work with.

Mileage-based Programs (also referenced as):

PAYG or Pay as you Go
PAYD or Pay as you Drive
On-demand
Pre-paid
Post-paid

Our key differentiators

One-stop shop for program needs

IMS UBI Intelligence offers insurers a single source provider for all their UBI program needs, including hardware, logistics, support, secure data warehousing, data analytics, driver portals and more. No need to deal with multiple suppliers and partners.

Fully Customizable Solutions Without Sacrificing Speed to Market

IMS UBI Intelligence provides the best of both worlds: 1) a turnkey approach to improve time-to-market while also 2) being customizable to branding and program requirements.

Value-added Services for Future Revenue Opportunities

IMS UBI Intelligence is powered by DriveSync® – IMS’ connected car platform – providing insurers the ability to roll out future revenue-generating services to current customers. Examples of value-added services include: infotainment, roadside assistance, vehicle health and more.

Ability to Offer Differentiated and Segmented Programs

IMS UBI Intelligence provides solution options so insurers can create targeted, differentiated programs for specific audiences and geographies.

The Best UBI Experts in the Industry

Access to a team of subject matter experts with the experience and best practices developed by working with numerous insurers around the globe.

Flexible and Scalable Architecture

IMS’ award–winning technology services platform is future-proofed for years to come and offers an unmatched solution that will help ensure the success of your UBI program in today’s competitive marketplace.

Data-Agnostic Collection Options

As the only true data source agnostic solution on the market, we work closely with you in choosing the right technologies to adopt to ensure you achieve your growth goals and potential. We make the whole process of a successful launch as simple and easy as possible.

Sensor Overview with Pros & Cons

Smartphone/ SDK Option

Use of mobile as sensor, either through white label app or SDK in 3rd party app

No-cost deployment and improvements in data integrity make this the most viable option for mainstreaming insurance telematics
Drives high levels of customer engagement via feedback apps
Operates completely independently to the vehicle and circumvents intrusion by OEMs
Can be deployed via bespoke apps or SDK into 3rd-party apps
More easily ‘game-able’ by the user to mask behaviors
Not capable of robust, reliable collision detection as not firmly anchored, so less value for claims
Device management can be a challenge as mobile manufacturers (esp. Apple) change parameters of operability (e.g. GPS & battery)

Self Powered/Beacon

Dashboard / windshield mounted battery-powered device

Low cost deployment and known data integrity make this an attractive option for middle to mainstream insurance telematics
Using a tethered app allows for improved customer engagement
Has high-fidelity collision detection capture within the device to aid with post collision claims handling
Easy self install for the customer, and captures journey data even if the mobile is not in the vehicle
No FNOL if the mobile is not in the vehicle at the point of collision
Battery life is limited to approximately 24 months, and requires replacement for following years

OBD

Dongle plug-in for OBD port

Only aftermarket device that can access CAN bus data, offering vehicle status data and prognostics
Ubiquitous in European & North American markets for insurance and fleet
Ease of self-installation (in some cases)
No current success in the UK insurance market due to inaccessibility of OBD port
Lack of consistency of data across vehicle makes/models (e.g. only > 60% accuracy on fuel level readings)
Faces an uncertain long-term future due to OEM threat: European OEMs lobbying to restrict 3rd party access; many ports block data transmission once over 30mph
Security concerns, and easy to 'tamper’

Black Box

Installed box

The UK standard for UBI, gives ‘always-on’ data stream
Standardization of data harvested from the device across all vehicles
High-fidelity collision detection and robustness of data helps claims remediation and boosts loss ratio performance
Theft detection and stolen vehicle recovery a key benefit for carriers and mobility operators, and can be positioned as an adoption driver for consumer propositions
No access to CAN bus data
Relevance may be limited long-term if OEMs manage to align around useful connected car data standards that are commercially viable

OEM / Connected Car

Direct feed / line fit from on-board computer

Potential to provide access to embedded sensors and a wealth of additional lines of data analysis, such as ADAS systems
OEMs are starting to realize the potential to monetize data for their own and 3rd party provider benefit – insurance is the key use case
Challenge around standardization of data protocols across all makes/models to make scoring unilaterally applicable
Uncertainty around timeline for ubiquity, and no clarity around likely cost of data to 3rd parties
Many manufacturers still concerned about data ownership and privacy

Download Data-Agnostic Collection Options as PDF