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Sometimes technology progresses slowly, and other times it leaps forward. Telematics, and the technologies that support it, are one of those leaps. Fueled by advancements in 5G, IoT connectivity, and more, telematics now enables accurate Usage-Based Insurance (UBI) on a scale we haven’t seen before. This pricing model allows consumers to pay for insurance based on their actual habits, be that energy consumption, driving, or other activities.

In the automotive sector, telematics devices track driving habits to reward safe driving. This data can be transmitted in real time, providing insurers with a more accurate picture of a driver’s risk profile. In the utilities sector, telematics allows accurate monitoring of energy consumption, identifies potential faults, and optimizes network performance. Smart meters, equipped with telematics capabilities, can provide real-time data on energy usage, allowing utilities to offer time-of-use pricing and demand response programs.

In other words, UBI is transforming the insurance industry. This shift from traditional risk-based pricing is reshaping the relationship between insurers and policyholders. This shift continues as more trends emerge. But what are these trends? Let’s get into it.

Surging 5G connectivity

The 5G boom in the United States has been nothing short of explosive. Just two years ago, there were nearly 162 million 5G-enabled devices in the country – almost double the amount from the year before. These devices now make up almost a third of all wireless connections. And the growth shows no signs of slowing down. By 2028, experts predict that 5G will dominate the wireless landscape, accounting for a whopping 91% of all connections.

5G is a game-changer for telematics. In the automotive sector, it’s powering real-time diagnostics, software updates, and connected car services. For consumers, this means safer, smarter driving. For insurers, it offers more accurate risk assessment and innovative products.

Beyond cars, 5G is transforming smart homes. Homeowners can now monitor energy usage, automate devices, and detect issues like leaks instantly. This means improved efficiency, reduced costs, and better relationships with insurers. Specifically, consumers won’t need to argue about insurance claims based on inaccurate usage data, as they can see the real-time impact of their behaviors (like turning the air conditioner on or washing clothes in higher heat).

As 5G becomes more widespread, we’ll see even more innovative telematics applications across industries. And perhaps more interestingly, we could see UBI become the dominant form of insurance in the coming years.

Crash detection & crash diagnostics

More models of cell phones, including the latest Apple and Pixel devices now include crash detection. Similarly, most new cars now feature automatic crash detection and can alert emergency responders. These features are mandatory in all new cars sold across Europe, but they are also important to US consumers. A whopping 51% of Americans say it is extremely or very important that their next car has a system where it will car emergency services when airbags deploy.

Crash diagnostics, powered by advanced sensors and 5G connectivity, are providing unprecedented insights into accidents. These systems can accurately record the speed, direction, and even force of impact, offering a more comprehensive understanding of the incident than traditional witness accounts or police reports.

This technological advancement is significantly impacting the insurance industry. By providing objective evidence, telematics can help insurers:

• Resolve disputes more efficiently: Telematics data can clarify conflicting accounts, reducing the time and cost associated with investigations.
• Offer more accurate pricing: By analyzing driving habits and accident risk, insurers can develop more personalized and equitable pricing models.
• Develop innovative products: Telematics-enabled features like accident prevention alerts and remote assistance can enhance customer satisfaction and loyalty.

Crucially, these telematics allow for faster claims processing with less human intervention. The last thing most consumers want to worry about after a crash is filling out forms. With a more advanced UBI policy, this data can be sent automatically.

Multimodal profiling

Multimodal profiling, though still in its early stages, has the potential to revolutionize UBI models. Current programs primarily focus on driving behavior, but the future of UBI lies in providing comprehensive coverage for all modes of mobility.

Imagine a UBI program that understands when you drive, cycle, or use an e-scooter. This “pay how you move” approach would offer continuous mobility coverage tailored to your individual needs. While mobile telematics will continue to monitor driving behavior, a single poorly scored car trip shouldn’t overshadow a customer’s overall mobility patterns.

By incorporating “green rewards” for less car usage, insurers can incentivize sustainable transportation choices, benefiting both customers and the environment. This holistic approach to mobility profiling would create a more equitable and sustainable UBI landscape, where customers are rewarded for their diverse transportation habits.

A smartphone-driven revolution

Future UBI products will undoubtedly leverage the capabilities of smartphones to an even greater extent, offering an app-based experience and insights beyond the car. The vast amounts of data collected by modern connected vehicles will also be harnessed to provide even more personalized and accurate UBI solutions.

For example, smartphone apps can track driving behavior, monitor vehicle health, and even detect potential risks like distracted driving. The options are plentiful here – monitoring when drivers are making/receiving calls, sudden braking, and whether they are driving recklessly in geofenced areas like schools and hospitals. These insights can be used to reward safe drivers with lower premiums and provide personalized recommendations for improving driving habits. Additionally, data from connected cars can offer a deeper understanding of driving conditions, allowing insurers to accurately assess risk and adjust premiums accordingly.

While the increased level of oversight may raise privacy concerns for some consumers, the potential benefits of UBI are significant. By accurately measuring driving behavior and risk, insurers can offer more equitable and affordable premiums. For safe drivers, UBI can result in substantial savings.

As technology continues to advance, we can expect even more innovative UBI solutions that seamlessly integrate with our daily lives. The future of UBI is bright, promising a more personalized, efficient, and rewarding driving experience for all.

Final thoughts

UBI is rapidly evolving, driven by advancements in telematics and 5G technology. As telematics capabilities expand, UBI will become even more personalized and accurate, offering consumers the opportunity to pay for insurance based on their actual usage. From driving habits to energy consumption, UBI is transforming the insurance landscape, providing a more equitable and rewarding experience for policyholders.