I caught up with Towers Watson global leader for usage-based insurance Robin Harbage today upon the release of the company's new scoring model for UBI programs. DriveAbility 2.0 Score, Harbage says, is more in line with the company's original view of the product: it is based on historical data collected over the course of three years with from actual insurance telematics users.
"Our previous score was based on public studies that had been done by driver behavior from multiple sources," Harbage explains. "Our second generation score is based specifically on the driving behavior -- we now have sufficient data that's been pooled over the past three years, calibrated to actual insurance losses."
The company had put out the original version when it became apparent that insurers wanted something so they could get started in the market, which has been heavily anticipated to grow over the past few years. I asked Harbage what his view was of telematics: Is the hype meeting demand?
"Progressive has said it's disappointed it isn't higher -- but they would like it to be 100%," he says. "No insurers have pulled back, which says something about their confidence in the market, though. We've seen information indicating that takeup rate is up to 40% for people who are shopping for insurance and are offered a UBI program."
With that in mind, Harbage expects three key strategies in the UBI market this year.
"I would expect insurers to continue to refine their marketing messages to encourage signups," he says. "They'll also expand their service offerings to add more types of value added services, and experiment more with new technologies.
"None of the mass-market programs in the U.S. market use smartphones today to collect the data," he adds. "We think there will be more and more use of smartphones, in some cases integrated with the OBD2 device, that can lower the cost of these programs."